4.2. Taxes Calculation

Try these first

1. 1.

   What is the formula for calculating annualized costs?

   Hint

   Look for the capital recovery factor.

2. 2.

   What does salvage value refer to?

   Hint

   Consider what an asset is worth at the end.

3. 3.

   What is the annualized cost of an initial investment of ₹3,00,00,000 at 7% over 10 years?

   • ₹37,01,852
   • ₹40,18,661
   • ₹42,50,000

   Hint

   Plug in the values into the formula to calculate.

4. 4.

   True or False: The sinking fund factor is used to calculate the annual contribution needed to reach a certain amount.

   • True
   • False

   Hint

   Consider what a sinking fund does over time.

5. 5.

   A company invests in equipment costing ₹50,00,000 with a salvage value of ₹5,00,000 after 15 years. Calculate the annualized cost at 8% interest including ownership costs of ₹1,00,000 per year.

   Hint

   Ensure to use the correct values for I, i, and n.

6. 6.

   Given an initial cost of ₹60,00,000 and a total salvage value of 10% after 12 years at 7% interest, compute the hourly tax rate if used for 2,400 hours annually.

   Hint

   Break down the components before calculating.