If the average interest rate is 12% and depreciation is to be accounted for by straight line method at 10%, which of the following equipment will be most economical?

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Mr. Dubey

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Q. If the average interest rate is 12% and depreciation is to be accounted for by straight line method at 10%, which of the following equipment will be most economical?

(A) Initial cost Rs. 4000 Annual disbursements Rs. 6000
(B) Initial cost Rs. 5500 Annual disbursements Rs. 4000
(C) Initial cost Rs. 6000 Annual disbursements Rs. 3880
(D) Initial cost Rs. 7000 Annual disbursements Rs. 2500

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✅ Correct Answer: (D) Initial cost Rs. 7000 Annual disbursements Rs. 2500

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