6 - Next Steps
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Practice Questions
Test your understanding with targeted questions
What is depreciation?
💡 Hint: Think about assets and how they decrease in value.
Calculate the first year depreciation for a machine purchased at ₹12,00,000 with a rate of 0.4.
💡 Hint: Use the formula: Purchase Price x Depreciation Rate.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does depreciation represent in terms of machinery?
💡 Hint: Think about how assets lose worth over time.
True or False: The economic life of machinery only considers initial costs.
💡 Hint: Think broader than just the debut investment.
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Challenge Problems
Push your limits with advanced challenges
A company purchased a new loader for ₹50,00,000 with a 0.35 depreciation rate. How much will this machine depreciate in the first three years and what will its book value be at the end of year three?
💡 Hint: Follow through each year's depreciation to get the correct book value.
Using the minimum cost method, if the annual operating cost of the current loader is ₹21,00,000 and next year's cost is projected to be ₹24,00,000, while the proposed loader holds an average annual cumulative cost of ₹20,00,000. Should the current loader be replaced?
💡 Hint: Compare future costs against average cumulative costs to determine action.
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Reference links
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