Practice Depreciation Calculation (3) - Initial Cost Analysis - Construction Engineering & Management - Vol 1

Practice: Depreciation Calculation

Lesson 3Initial Cost Analysis

Practise this section

8 questions

Flashcard drill
5 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
2 questions · about 1 min · pass mark 70%. Hints available.
Sign up to start the quiz

6 sample questions

Question 1.
Calculate the annualized cost if the initial cost is ₹2,50,00,000 with an interest rate of 7% over 10 years.
Show hintHide hint
Use the formula for annualizing cost with interest and term.
Question 2.
What is salvage value if the initial cost is ₹1,00,00,000 and it depreciates to 15% at the end of its life?
Show hintHide hint
Calculate 15% of the initial cost.
3Question 3.
What does the Initial Cost represent?
- The total payment for the asset
- Future revenue
- Operational costs
Show hintHide hint
Think about the purchase price of the machinery.
4Question 4.
True or False: Salvage Value is not relevant for depreciation calculations.
- True
- False
Show hintHide hint
Consider how asset depreciation works over time.
Question 5.
If a machine costs ₹5,00,00,000, with an 8% salvage value over 15 years, calculate the total hourly ownership cost assuming operational hours of 2000/year.
Show hintHide hint
Break it into smaller parts to compute each cost.
Question 6.
Consider a machine with an initial cost of ₹3,24,00,000 and a salvage value of 20%. How would you compute the hourly depreciation given it’s used 1600 hours each year?
Show hintHide hint
Combine your understanding of annual cost and salvage value precisely into this calculation.

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