Practice Depreciation And Book Value (4) - Cost of Investment - Construction Engineering & Management - Vol 1

Practice: Depreciation and Book Value

Lesson 4Cost of Investment

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9 questions

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6 sample questions

Question 1.
Define investment cost.
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Consider what expenses are involved in acquiring a machine.
Question 2.
What is depreciation?
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Think about how an asset's worth diminishes as it ages.
3Question 3.
What does investment cost include?
- Only the purchase price
- Purchase price and interest
- Only interest
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Think about both purchasing and financing aspects.
4Question 4.
True or False: Depreciation increases the value of an asset over time.
- True
- False
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Consider the definition of depreciation.
Question 5.
A mining company has a machine with an initial cost of $250,000, a salvage value of $30,000 and a useful life of 10 years. Calculate the annual depreciation and the total ownership costs (with 10% investment cost, 3% insurance, 2% property tax, 1.5% storage).
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Break it down into parts.
Question 6.
A machine is purchased for $80,000, with a salvage value of $5,000 and a useful life of 7 years. Calculate the average annual investment and determine total ownership cost, including 9% investment cost, 2% insurance, 2.5% tax, and 1.2% storage.
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Use the formulas discussed.

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