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## Q. 5.16

A company purchased a small equipment for ₹70,000. Annual maintenance costs are expected to be ₹1,850, but extra income will be ₹14,000 per year. How long will it take for the company to recover its investment at an interest rate of 10% per year?

## Verified Solution

$0=-₹70,000+\left(₹14,000-₹1,850\right)\left(P/A,10\%,n\right)$

$\left(P/A,10\%,n\right)=5.76132$

n is between 9 and 10;
therefore, it would take 10 years for the company to recover its investment.