4.6. Calculating Hourly Depreciation

Try these first

1. 1.

   What is the formula for calculating hourly depreciation?

   Hint

   Remember to define what A and S represent.

2. 2.

   Explain the purpose of the uniform series capital recovery factor.

   Hint

   Think about loan repayments.

3. 3.

   What is the first step in estimating hourly depreciation?

   • Calculate Annualized Cost
   • Calculate Salvage Value
   • Find Purchase Price

   Hint

   Think about the sequence of financial calculations.

4. 4.

   The uniform series capital recovery factor is used to convert a lump-sum amount into:

   • True
   • False

   Hint

   Recall its main functionality.

5. 5.

   A contractor owns a machine with a purchase price of ₹85,00,000, a salvage value of ₹5,00,000, and expects to operate it for 10 years at 2000 hours a year. Calculate the hourly depreciation.

   Hint

   Break down the calculation into parts.

6. 6.

   If a machine incurs additional yearly costs from insurance at 3%, tax at 2.5%, and storage at 1% on a cost after tire deductions, how would the total hourly cost calculation be affected?

   Hint

   Each cost needs to be carefully adjusted before calculations.