Practice Summary Of Methods (5) - Depreciation Calculation - Construction Engineering & Management - Vol 1

Practice: Summary of Methods

Lesson 5Depreciation Calculation

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8 questions

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6 sample questions

Question 1.
What is depreciation?
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Think about what happens to the value of a car over years.
Question 2.
Calculate the depreciation for a machine valued at 50 lakh with a depreciation rate of 20%.
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Use the formula: Depreciation = Rate × Book Value.
3Question 3.
What is the formula for calculating depreciation?
- Depreciation = Rate × Book Value
- Depreciation = Book Value - Current Value
- Depreciation = Current Value ÷ Total Years
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Remember the rate's role in determining financial worth.
4Question 4.
True or False: The minimum cost method focuses on when the annual cost of the old machine is less than that of the new.
- True
- False
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Consider how costs interplay in decision making.
Question 5.
Calculate the cumulative costs over 5 years with a starting annual cost of 20 lakh that increases by 10% each year due to maintenance.
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Remember to use the formula for a growing annuity.
Question 6.
Given that average annual profits for a current machine is 4 lakh, calculate when to replace it if the proposed machine's average annual profit is 5 lakh indicating a better investment.
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Project the profits over the machine lifespan to make the best decision.

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