Practice Methods To Calculate Cost Of Investment (1.2)

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6 sample questions

Question 1.
Define the term 'Cost of Investment'.
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Consider what it means in terms of capital.
Question 2.
What is depreciation?
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Think about how value decreases with time.
3Question 3.
What does the Cost of Investment entail?
- Only purchase price
- Purchase price and depreciation
- Annual cost including capital and opportunity costs
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Remember the broader definition of costs.
4Question 4.
True or False: The average annual investment method simplifies the complexity of ownership costs.
- True
- False
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Consider the purpose of the method.
Question 5.
A company buys a loader for 50 lakhs with a 5-lakh salvage value. The useful life is 10 years. Calculate the average annual investment.
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Get the components of initial cost and salvage value correct.
Question 6.
If a machine costs 120 lakhs, with an expected salvage of 15 lakhs, how does its ownership cost influence bid preparation?
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Think about long-term financial planning.

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