Practice Components Summary - 2.4 | 7. Cost of Investment | Construction Engineering & Management - Vol 1
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2.4 - Components Summary

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the investment cost?

💡 Hint: Think about the financial burden of owning machinery.

Question 2

Easy

What does depreciation mean?

💡 Hint: Consider how a car loses value over the years.

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 are investment costs primarily concerned with?

  • Cost of maintenance
  • Annual cost of capital
  • Insurance premiums

💡 Hint: Think about what owning equipment financially entails.

Question 2

Is it true that insurance costs always cover maintenance?

  • True
  • False

💡 Hint: Consider the purpose of insurance.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

You are tasked with preparing a bid for a construction project. You must account for a piece of machinery costing $100,000, with a salvage value of $20,000, an expected useful life of 5 years, insurance costs of 2%, tax costs of 2.5%, and storage costs of 1%. Calculate the total ownership cost.

💡 Hint: Break down your calculation into parts for clarity.

Question 2

A contractor is assessing the ownership cost of two machines. Machine A has an initial cost of $50,000 and a salvage value of $10,000 with a useful life of 10 years. Machine B costs $70,000 with a salvage value of $15,000 also over 10 years. Which machine has the lower total ownership cost when you consider taxes, insurance, and storage?

💡 Hint: Apply the AAI formula for both machines.

Challenge and get performance evaluation