A building is newly constructed with cost of Rs. 1cr over a plot of landing costing Rs. 70 lacs. Building consists of 20 flats of area 120m² each workout monthly standard rent/flat from the following data

Expected net return from land & building = 7%

Rate of interest on sinking fund = 9%

Life of building = 60 years

Salvage value = 10% of the cost of building

Repairs & maintenance cost = 7% of building cost

Taxes and other outgoings = 25% of gross rent.

Building cost = 1,00,00,000

Land cost = 70,00,000

Total cost = 1,70,00,000

Net return:-

$= \frac{7}{100} *×1,70,00,000$

= 11,90,000

Sinking fund:-

$Ic = \frac{i}{(1+i)^n-1} \\ = \frac{0.09}{(1+0.09)^{60}-1} \\ Ic = 5.14 × 10^{-4}$

Sinking fund installment = Ic × (cost – scrap)

$= 5.14 ×10^{-4}× (10000000-0.1×10000000) \\ = 4626$

Repair …