Practice Future Salvage Value And Sinking Fund Factor (5.2) - Uniform Series Capital Recovery Factor

Practice: Future Salvage Value and Sinking Fund Factor

Lesson 5.2Uniform Series Capital Recovery Factor

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10 questions

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3 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
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Quiz
4 questions · about 3 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
What is the use of the Uniform Series Capital Recovery Factor?
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Think about how businesses plan their finances.
Question 2.
Define the Sinking Fund Factor.
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What do we want to save for in the future?
3Question 3.
What does the Uniform Series Capital Recovery Factor calculate?
- Annual cash inflows
- Annual cash outflows
- Annual ownership costs
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Think of cash as money going OUT.
4Question 4.
True or False: The Sinking Fund Factor is used to determine how much to save annually for future expenditures.
- True
- False
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Think about your savings for a new car in the future.
Question 5.
You have a machine that costs $250,000 with a life expectancy of 10 years. If you know the salvage value is $40,000, calculate the actual annual costs including depreciation and savings for replacement.
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Don’t forget to consider the time value in your calculation.
Question 6.
A company plans to replace a piece of equipment for which they need $120,000 in 5 years. If they earn 4% interest on their sinking fund, what is their annual contribution?
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Apply the sinking fund formula accurately.

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