4.2.1 - Book Value Calculation Formula
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Practice Questions
Test your understanding with targeted questions
What is the formula to calculate the cost of investment?
💡 Hint: Think about the basic components needed to determine the investment cost.
Define depreciation in your own words.
💡 Hint: Consider how machines lose value as they are used.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the formula for calculating the cost of investment?
💡 Hint: Think about what financial costs are involved in machinery ownership.
True or False: Depreciation represents the increase in value of machinery over time.
💡 Hint: Reflect on what happens to machinery as it is used.
1 more question available
Challenge Problems
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A piece of machinery costs $200,000 with a salvage value of $40,000 and a useful life of 15 years. Calculate the annual depreciation. Why might this figure help in project estimation?
💡 Hint: Always remember to deduct salvage value when calculating depreciation.
If a company borrows money to purchase equipment valued at $100,000 at an interest rate of 6%, how much would the company need to account for in annual investment costs?
💡 Hint: Understand how interest rates affect overall investment costs.
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