Practice Input Data For Example (5.1) - Cost of Investment - Construction Engineering & Management - Vol 1

Practice: Input Data for Example

Lesson 5.1Cost of Investment

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8 questions

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Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
Define what the cost of investment includes.
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Consider components like interest rates and potential returns.
Question 2.
What are two methods for calculating investment costs?
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Think about the importance of timing in cash flows.
3Question 3.
What is the formula for calculating the cost of investment?
- Cost = Interest Rate x Purchase Price
- Cost = Interest Rate x Value of Equipment
- Cost = Purchase Price - Interest Rate
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Think about what components are involved in this formula.
4Question 4.
True or False: The Average Annual Investment Method provides an exact calculation of ownership costs.
- True
- False
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Consider whether the term 'exact' applies.
Question 5.
Assuming a machine has a purchase price of INR 1,000,000, a salvage value of INR 100,000, and a useful life of 10 years, calculate the average annual investment using the Average Annual Investment formula.
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Break down the values into P, S, and n.
Question 6.
If you want to calculate total ownership cost for a machine which has a depreciation of INR 250,000, investment cost of INR 100,000, insurance cost of INR 15,000, tax cost of INR 20,000, and storage cost of INR 10,000, what is the total cost?
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Ensure all components are included in your calculations.

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