Read the following passage and answer questions that follows
You are given a valuation assignment to value a vehicle being a bulker for bank finance, proposed to be purchased by Mr. Y. Mr. X had purchased the vehicle for Rs.30 lakh in January 2014. Current cost of brand new vehicle after considering negotiation discount in new condition is Rs.33 lakh as per dealer of vehicle. Your survey indicated that:
- recently similar vehicle with exactly similar mileage and model was sold for Rs.17 lakh
- asking prices for similar vehicles is Rs.18 lakh.
Based on your discussions with suppliers of vehicle and your own analysis, total economic life of vehicle is considered as 10 years, if vehicle is used for commercial use similar to the subject vehicle under valuation. Mr. X informed Mr. Y that Mr. X would be required to spend about Rs.2 lakh for repairs to the body of vehicle and replacement of worn out tyres. Your discussions with the mechanic indicated that the quote for repairs given by Mr. Y is reasonable and vehicle sold recently did not require repairs as compared to the subject vehicle. Book value of the vehicle as at valuation date is Rs.15.75 lakh. Your research has indicated that index for light, medium and heavy commercial vehicles in January 2014 is 111.6 and as at Valuation Date is 113.2.