4.2 - Cumulative Investment Costs
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Practice Questions
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What is the economic life of a machine?
💡 Hint: Think about the optimal time to replace machinery.
Define depreciation.
💡 Hint: Consider how wear and tear affects machinery.
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Interactive Quizzes
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What does economic life refer to?
💡 Hint: Consider when a machine is most cost-effective.
True or False: Depreciation increases the book value of an asset over time.
💡 Hint: Think about how assets lose value.
2 more questions available
Challenge Problems
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A machine has a purchase price of 50,00,000 and follows the double declining balance method with an 8-year lifespan. Calculate the depreciation for the first three years.
💡 Hint: Follow the steps for each year and keep track of the book value.
Calculate the cumulative costs of maintenance for a machine where initial maintenance is 2,00,000 growing by 10% each year. Calculate for 5 years.
💡 Hint: Apply the growth factor diligently, and keep adding to find cumulative costs.
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