Practice Understanding Investment Cost - 1.1 | 7. Cost of Investment | Construction Engineering & Management - Vol 1
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Knowledge

1.1 - Understanding Investment Cost

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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 how investments may lead to costs.

Question 2

Easy

Define depreciation.

💡 Hint: Consider how wear and tear affects value.

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 does investment cost refer to?

  • Only interest on loans
  • Opportunity cost of not investing
  • Annual cost of capital in machinery

💡 Hint: Consider all costs of capital.

Question 2

True or False: The average annual investment method is more precise than the time value method.

  • True
  • False

💡 Hint: Think about method accuracy and errors.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A construction company is evaluating two different types of machinery. Machine A costs $80,000 to purchase and has an anticipated resale value of $10,000 after 10 years. Machine B costs $100,000 with a resale value of $20,000 after the same period. How does the average annual investment cost compare for each machine assuming a depreciation of straight line?

💡 Hint: Calculate using average values over the lifespan of the machinery.

Question 2

You are considering purchasing an equipment set worth $150,000 with a salvage value of $25,000 expected to last for 15 years. If you use the time value method with a cost of capital of 5%, what are the total costs involved?

💡 Hint: First find depreciation, then add possible costs from investment income missed.

Challenge and get performance evaluation