Option 1 -> This represents only the gross output without deducting intermediate goods or depreciation.
Option 2 -> This accounts for only the capital consumption but ignores the intermediate goods used.
Option 3 -> This correctly deducts both intermediate goods (Rs 200) and capital consumption (Rs 100) from gross output (Rs 1000).
Option 4 -> This represents only the capital consumption value, not the net production value.
Hence, Option 3: Rs 700 per year -> Net value of total production = Gross output - Intermediate goods - Capital consumption = Rs 1000 - Rs 200 - Rs 100 = Rs 700. This represents the actual value addition by the firm after accounting for inputs used and depreciation of capital assets. -> correct