Practice Calculating Average Annual Investment - 5.2 | 7. Cost of Investment | Construction Engineering & Management - Vol 1
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5.2 - Calculating Average Annual Investment

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What does investment cost represent?

💡 Hint: Think about what it costs to use a machine each year.

Question 2

Easy

Name one factor that affects depreciation.

💡 Hint: Consider how long you've had an item.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the average annual investment method used for?

  • An accurate cash flow estimate
  • An approximate way to calculate investment costs
  • A method to determine equipment rental rates

💡 Hint: Consider what 'average' implies in financial calculations.

Question 2

True or False: Depreciation increases the value of equipment over time.

  • True
  • False

💡 Hint: Think about how long you keep equipment and what happens to its value.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A piece of equipment is purchased for $50,000 with a salvage value of $5,000 and is expected to last 15 years. Calculate the average annual investment.

💡 Hint: Use the provided formula to find the AAI.

Question 2

If the ownership costs of a machine including insurance, taxes, and depreciation sum to $1,000 annually, what is the average investment per year if the average value of the machine is $20,000?

💡 Hint: Calculate the annual costs as a percentage to find out average outgoings.

Challenge and get performance evaluation