 Hello and how are you all today? The question says a machine cost a company Rs 575,000 and its effective life is estimated to be 20 years. A sinking fund is created for replacing the machine at the end of its lifetime when its scrap realises a sum of Rs 75,000 only. Calculate what amount should be provided every year out of the profits for the sinking fund if it accumulates an interest of 5% per annum compounded annually. Here we need to use the value of 1.05 raised to the power 20 as 2.655. So let us write down whatever is given to us in the question first. We are given the cost of the machine equal to Rs 5,75,000. Its scrap value is given to us as Rs 75,000 so that means amount required in the sinking fund at the end of 20 years at 5% per annum interest is Rs 5,75,000 minus Rs 75,000 which is equal to Rs 5,00,000. We know that we can find out an amount of annuity by using this formula. Here I represent the rate of interest that is 5% per annum, Rs is the periodic payment and N is the time period. So on substituting these values we have 5,00,000 equal to Rs 1 plus i that is 5% that is 0.05 raised to the power N that is 20 minus 1 upon i. This further implies 5 lakh is equal to our bracket 1.05 raised to the power 20 minus 1 upon 0.05. Now the value of this term is given to us in the question itself. So on using that value we have our bracket 2.655 minus 1 upon 0.05 which further implies 5 lakh into 0.05 divided by 1.655 is equal to R that on simplifying gives us the value as Rs 173,71.60 as the periodic payment. So this is our required answer to this session. Hope you understood it well and enjoyed it. Have a nice day.