Practice Example Of Uniform Annual Deposits For Equipment Replacement (1.9.1) - Construction Methods and Equipment Management

Practice: Example of Uniform Annual Deposits for Equipment Replacement

Lesson 1.9.1Construction Methods and Equipment Management

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9 questions

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6 sample questions

Question 1.
What is the future value of $1,000 invested at a 3% interest rate over 4 years?
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Use the formula F = P(1+i)^n.
Question 2.
If I want $5,000 in 2 years at an interest rate of 4%, how much should I invest now?
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Rearrange the present value formula.
3Question 3.
What is the future value of $1,000 after 3 years at an interest rate of 5%?
- $1,157.63
- $1,215.51
- $1,050.00
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Multiply the principal by 1 plus the interest rate to the power of the number of years.
4Question 4.
The present value of receiving $20,000 in 5 years at a 6% interest rate is...
- True
- False
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Consider how much would be needed today using the present value formula.
Question 5.
If a piece of industrial equipment costs $300,000 today and is projected to increase in price by 10% annually, what will be the cost in 6 years?
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Consider how much you would need to allocate for future budgets.
Question 6.
A company plans to replace its machinery worth $2 million in 8 years. If they want to save $200,000 annually, what interest rate must the sinking fund achieve if they need to accumulate that amount?
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Re-arranging and calculating iteratively may be necessary to ascertain the rate.

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