Practice Understanding Investment Cost (1.1) - Cost of Investment - Construction Engineering & Management - Vol 1

Practice: Understanding Investment Cost

Lesson 1.1Cost of Investment

Practise this section

9 questions

Flashcard drill
3 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
Sign up to start the exercise
Quiz
3 questions · about 2 min · pass mark 70%. Hints available.
Sign up to start the quiz

6 sample questions

Question 1.
What does investment cost represent?
Show hintHide hint
Think about how investments may lead to costs.
Question 2.
Define depreciation.
Show hintHide hint
Consider how wear and tear affects value.
3Question 3.
What does investment cost refer to?
- Only interest on loans
- Opportunity cost of not investing
- Annual cost of capital in machinery
Show hintHide hint
Consider all costs of capital.
4Question 4.
True or False: The average annual investment method is more precise than the time value method.
- True
- False
Show hintHide hint
Think about method accuracy and errors.
Question 5.
A construction company is evaluating two different types of machinery. Machine A costs $80,000 to purchase and has an anticipated resale value of $10,000 after 10 years. Machine B costs $100,000 with a resale value of $20,000 after the same period. How does the average annual investment cost compare for each machine assuming a depreciation of straight line?
Show hintHide hint
Calculate using average values over the lifespan of the machinery.
Question 6.
You are considering purchasing an equipment set worth $150,000 with a salvage value of $25,000 expected to last for 15 years. If you use the time value method with a cost of capital of 5%, what are the total costs involved?
Show hintHide hint
First find depreciation, then add possible costs from investment income missed.

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