An old building has a future life of 15 years. The rate of interest on capital is 7%. If the coefficient of annual sinking fund is 0.43, then what will be the value of the year's purchase?
Year’s purchase is defined as the capital sum required to be invested in order to receive an annuity of Re 1.00 at a certain rate of interest.
Year of purchase = 1/(SFF + i)
i = rate of interest = 7% = o.o7
SFF = Sinking fund coefficient = 0.43
= 1/(0.43 + 0.07) = 2