Allied & ICAR Exam Bank • ALLIED_2941 NAT • 2 Marks

Section 2: Farm Machinery

Farm Machinery

Subtopic: Cost analysis of implements and tractors

Question Statement:

For an implement with initial price $P = \text{Rs. }1,00,000$ and salvage value $S = \text{Rs. }10,000$, with annual interest rate $i = 10\%$ ($0.10$), the annual interest cost in Rs. is:

Answer Key:

5500

Step-by-Step Solution & Explanation

Average investment = $\frac{100000 + 10000}{2} = 55000\text{ Rs}$. Interest = $55000 \times 0.10 = 5500\text{ Rs/year}$.
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