Practice Estimating Ownership Cost Using Time Value Concepts (4) - Uniform Series Capital Recovery Factor

Practice: Estimating Ownership Cost Using Time Value Concepts

Lesson 4Uniform Series Capital Recovery Factor

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8 questions

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6 sample questions

Question 1.
What is the purpose of the Capital Recovery Factor?
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Think about loan repayments over time.
Question 2.
What does Ownership Cost refer to?
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Consider what expenses are involved in running equipment.
3Question 3.
What does CRF help you determine in financial terms?
- Weekly payment amounts
- Annual cash flows
- Monthly costs
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Think about the uniform amount it provides.
4Question 4.
True or False: The Present Worth Factor can help determine how much cash you need today to generate future cash flows.
- True
- False
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Remember what the factor represents.
Question 5.
A drill costs ₹150 lakhs, has an estimated life of 15 years, and a salvage value of ₹25 lakhs. Calculate the annualized ownership cost including a tax rate of 3%, storage of 1.5% of the purchase price, and operating hours of 3000 per year.
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Remember to factor in all cost percentages to the annualized amount.
Question 6.
If a company wishes to earn ₹2 lakhs annually from their investment for the next 20 years at an interest rate of 5%, what is the present worth needed now?
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Refer back to the formula for calculating present worth.

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