Practice Equipment Cost - Ownership Cost (average Annual Investment Method) (2)

Practice: Equipment cost - Ownership cost (Average annual investment method)

Lesson 2Construction Methods and Equipment Management

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10 questions

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6 sample questions

Question 1.
What does ownership cost represent?
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Think about what costs you would need to cover just to own the equipment.
Question 2.
Name one method of calculating depreciation.
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What is a simple way to spread a cost evenly over several years?
3Question 3.
What are ownership costs?
- Costs incurred only when equipment is in use
- Annual costs incurred regardless of equipment usage
- Only the purchase price of the equipment
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Think about the costs you pay just to keep equipment.
4Question 4.
Is depreciation a cash flow item?
- True
- False
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Remember what depreciation reflects.
Question 5.
Given an excavator with an initial cost of $90,000, a tire cost of $5,000, a salvage value of $10,000, and a useful life of 12 years; calculate the annual depreciation using the straight line method.
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Remember to subtract the tire cost and salvage value.
Question 6.
If a loader is expected to generate $150,000 in revenue and incurs ownership costs of $30,000, how would underestimating these costs affect the project’s profitability?
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Consider the relation between costs and revenues in project bids.

6 more questions in this section. Enroll free to practise them all.