If out of net annual income of the year Rs. 42,000 the preference dividend and equity dividend paid are Rs. 7,000 and Rs. 24,000 respectively, and total equity capital be Rs. 1,40,000 the return on equity capital will be:

The correct answer is B. 27%.

The return on equity capital is calculated by dividing the net annual income of the year by the total equity capital. In this case, the net annual income is Rs. 42,000, the preference dividend is Rs. 7,000, the equity dividend is Rs. 24,000, and the total equity capital is Rs. 1,40,000. Therefore, the return on equity capital is:

$42,000 – (7,000 + 24,000) / 1,40,000 = 27\%$

The other options are incorrect because they do not correctly calculate the return on equity capital. Option A is incorrect because it does not subtract the preference dividend and equity dividend from the net annual income. Option C is incorrect because it does not divide the net annual income by the total equity capital. Option D is incorrect because it does not take into account the preference dividend and equity dividend.