Practice Maximum Profit Method Overview - 5.3 | 18. Depreciation Calculation | Construction Engineering & Management - Vol 1
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5.3 - Maximum Profit Method Overview

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the formula to calculate annual profit?

💡 Hint: Think about what subtracting costs from revenue represents.

Question 2

Easy

Define Cumulative Profit.

💡 Hint: Consider how profits from multiple years add up.

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 the Maximum Profit Method focus on?

  • Minimizing costs
  • Maximizing profits
  • Managing depreciation

💡 Hint: Think about what the method's name implies regarding profits.

Question 2

True or False: The economic life of machinery is defined as the period of maximum cumulative profit.

  • True
  • False

💡 Hint: Consider whether the definition aligns with how we’ve discussed economic life.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A machine generates the following annual profits over six years: 10 lakh, 12 lakh, 15 lakh, 14 lakh, 8 lakh, and 5 lakh. Calculate the average annual cumulative profit over these years.

💡 Hint: Remember to divide total cumulative profits by the total number of years.

Question 2

If the current machine has a decreasing estimated profit from 20 lakh to 18 lakh in the second year while the proposed new machine shows a steady profit of 22 lakh, should the current machine be replaced?

💡 Hint: Compare current estimated profits against those of the proposed machine.

Challenge and get performance evaluation