2. Comparison of Loaders

Try these first

1. 1.

   Calculate the first-year depreciation of a loader purchased for 30 lakh at a depreciation rate of 40%.

   Hint

   Use the formula: Depreciation = Purchase Price x Depreciation Rate.

2. 2.

   What does book value refer to?

   Hint

   Consider what happens to an asset’s value over time.

3. 3.

   What is the first-year depreciation for a loader purchased at 40 lakh with a depreciation rate of 0.4?

   • 16 lakh
   • 12 lakh
   • 10 lakh

   Hint

   Think about the percentage of the purchase price.

4. 4.

   True or False: Annual costs include both operating costs and depreciation.

   • True
   • False

   Hint

   Recall how we calculate annual costs.

5. 5.

   You have a loader that costs 60 lakh and depreciates at 30% in its first year. Calculate the book value after one year and the associated first-year costs if operating costs are 20 lakh.

   Hint

   Remember to calculate depreciation before finding the book value.

6. 6.

   Compare two loaders: Loader A has an average annual cumulative cost of 22 lakh over five years. Loader B has an average of 20 lakh. Which one would you recommend replacing, and why?

   Hint

   Consider both the average operational and annual costs.