Practice Storage Costs (2.3) - Cost of Investment - Construction Engineering & Management - Vol 1

Practice: Storage Costs

Lesson 2.3Cost of Investment

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9 questions

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6 sample questions

Question 1.
Define investment costs in your own words.
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Think about purchase and any associated interest.
Question 2.
What are storage costs?
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Consider maintenance and security.
3Question 3.
What represents the annual cost of capital invested in a machine?
- Operating Cost
- Investment Cost
- Maintenance Cost
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Refer back to the definition of investment costs we discussed.
4Question 4.
True or False: The Average Annual Investment Method accounts for cash flow timings.
- True
- False
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Remember our segmentation of these two methods.
Question 5.
A construction company buys a crane for $120,000 and expects a salvage value of $15,000 after 10 years. Calculate the average annual investment. Discuss implications on project costs if this calculation is incorrect.
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Utilize the average annual investment formula from our last class.
Question 6.
A project manager mistakenly underestimates the storage costs of machinery. What steps should they take to reassess and correct the budget?
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Revisit the cost components we discussed and analyze each.

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