Practice Payback Period Method - 4 | 18. Depreciation Calculation | Construction Engineering & Management - Vol 1
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Knowledge

4 - Payback Period Method

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

Calculate the depreciation for a machine with a purchase price of 20 lakh at a 40% rate.

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

Question 2

Easy

What is book value at the end of the first year if the initial cost is 30 lakh and depreciation is 12 lakh?

💡 Hint: Subtract depreciation from initial cost.

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 Payback Period Method measure?

  • Cost of depreciation
  • Time to recover investment
  • Annual profit

💡 Hint: Think about what aspect of the investment the term 'payback' refers to.

Question 2

True or False: The economic life of a machine is when operating costs start to decrease.

  • True
  • False

💡 Hint: Consider the context of machine replacement.

Solve and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

If a machine costs 40 lakh and has operating costs increasing each year while the projected profits increase less than the costs, determine the payback period considering both aspects.

💡 Hint: Keep track of both costs and revenues year by year.

Question 2

Using specific values, compare two machines where one has a shorter payback period but lower economic life, and the other a longer payback but higher profits over time. Which should be chosen?

💡 Hint: Factor in the company's financial goals and cash flow situation.

Challenge and get performance evaluation