Finance Numericals

In case of opening short working reserve a/c: Example: A coal company took a land for lease for 30 years from Mr. Y on minimum rent of Rs. 12, 000 per annum. The company is agreeing to pay royalty @ 75 paisa per ton. The excess of minimum rent over royalty is recoup in the first four year only. Find out the royalty if the company decides to open short workings reserve a/c. The output of five years is as follows: Years Output 1 14, 000 2 26, 500 3 36,900 4 12, 000 5 46, 200 Solution: Years Output Royalty @ 75 paisa per ton of output Minimum rent Short workings Surplus 1 14, 000 10, 500 12, 000 1, 500 ----- 2 26, 500 19, 875 12, 000 ----- 7, 875 3 36,900 27, 675 12, 000 ----- 15, 675 4 12, 000 9, 000 12, 000 3,