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3 cards from this section. Quick, good the night before a test.
Calculate the first-year depreciation of a loader purchased for 30 lakh at a depreciation rate of 40%.
Use the formula: Depreciation = Purchase Price x Depreciation Rate.
What does book value refer to?
Consider what happens to an asset’s value over time.
What is the first-year depreciation for a loader purchased at 40 lakh with a depreciation rate of 0.4?
Think about the percentage of the purchase price.
True or False: Annual costs include both operating costs and depreciation.
Recall how we calculate annual costs.
You have a loader that costs 60 lakh and depreciates at 30% in its first year. Calculate the book value after one year and the associated first-year costs if operating costs are 20 lakh.
Remember to calculate depreciation before finding the book value.
Compare two loaders: Loader A has an average annual cumulative cost of 22 lakh over five years. Loader B has an average of 20 lakh. Which one would you recommend replacing, and why?
Consider both the average operational and annual costs.
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