An earth moving equipment costs Rs. 5,00,000 and has an estimated life of 10 years and a salvage value of Rs. 50,000. What uniform annual amount must be set aside at the end of each of the 10 years for replacement if the interest rate is 8% per annum and if the sinking fund factor at 8% per annum interest rate for 10 years is 0.069?

• A. Rs. 37950
• B. Rs. 31050
• C. Rs. 50000
• D. Rs. 34500

Answer: (B)