Practice Payback Period Explanation - 4.1 | 18. Depreciation Calculation | Construction Engineering & Management - Vol 1
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4.1 - Payback Period Explanation

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the payback period?

💡 Hint: Think about recovering your initial expenditure.

Question 2

Easy

Define economic life.

💡 Hint: Consider how long a machine effectively serves its purpose.

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 is the payback period?

  • A method to calculate depreciation
  • Time taken to recover investment
  • The lifespan of a machine

💡 Hint: It focuses on cash flow recovery.

Question 2

True or False: The economic life of equipment is the time during which it is cost-effective to use.

  • True
  • False

💡 Hint: Think about how long machines remain beneficial.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A factory has two machines: Machine A costs 60 lakh and earns 12 lakh per year; Machine B costs 48 lakh but earns 14 lakh for the first 4 years and drops to 6 lakh after that. Calculate the payback period for both machines and suggest which to select.

💡 Hint: Calculate each machine's cumulative profits yearly to see when they reach the initial investment.

Question 2

Evaluate a scenario where a company has to choose between retaining an older machine that costs 40 lakh with expected annual profits of 8 lakh and a new machine at 50 lakh with 9 lakh for 5 years. Determine if changing the machine is justified.

💡 Hint: Focus on potential efficiency gains from the new machine.

Challenge and get performance evaluation