Practice Peurifoy Method - 3 | 12. Equipment cost – Caterpillar and Peurifoy method | Construction Engineering & Management - Vol 1
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Knowledge

3 - Peurifoy Method

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is depreciation?

💡 Hint: Consider how equipment value changes over time.

Question 2

Easy

What does the time value method account for?

💡 Hint: Think about how cash received today is more valuable than cash received in the future.

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 main objective of the Peurifoy method?

  • To minimize equipment costs
  • To accurately estimate equipment costs
  • To maximize investment returns

💡 Hint: Think about how project budgeting relies on accurate cost estimation.

Question 2

True or False: The average annual investment method considers the timing of cash flows.

  • True
  • False

💡 Hint: What happens to cash flows over time?

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A construction company purchases an excavator for $150,000 with a salvage value of $30,000 and an estimated life of 10 years. If the excavator is used for 2,000 hours a year, calculate the hourly depreciation.

💡 Hint: Apply the straight-line method, just like we did before.

Question 2

Discuss the implications of using the average annual investment method compared to the time value method for a construction project with fluctuating cash flows due to seasonal work.

💡 Hint: Think about how timing affects financing in construction projects.

Challenge and get performance evaluation