IDENTIFICATION

Question 1

is an application of perpetuity.

Answer 1

CAPITALIZED COST

Question 2

sum of the first cost (FC) and the present worth of all future payments and replacements which is assumed to continue forever.

Answer 2

CAPITALIZED COST

Question 3

first cost plus the
present worth of annual maintenance and operation cost plus
the present worth of depreciation assumed to continue forever.

Answer 3

CAPITALIZED COST

Question 4

Annual interest on investment + Annual operation and
maintenance + Annual depreciation cost

Answer 4

ANNUAL COST

Question 5

series of cash flows that change by constant amount from period to period. This is commonly encountered in situations where costs or benefits increase or decrease by a fixed amount each period.

Answer 5

UNIFORM GRADIENT

Question 6

a cash flow that either
increases or decreases by a
constant amount. The cash flow,
changes by the same amount each
period. The amount of decrease or
the increase is the gradient or G.
Therefore, it is composed of base
amount and gradient part.

Answer 6

ARITHMETIC GRADIENT

Question 7

is a cash flow series that either
increases or decreases by a constant rate/percentage.

Answer 7

GEOMETRIC GRADIENT

Question 8

refers to the decrease in the value of an asset, due to usage of passage of time. An asset may depreciate physically or functionally.

Answer 8

DEPRECIATION

Question 9

most common method used in computing depreciation.
In this method, the cost of the property is assumed to vary linearly with time.

Answer 9

STRAIGHT LINE DEPRECIATION

Question 10

an imaginary fund called a sinking fund is invested yearly at a rate of i to amount to (FC-SV) at the end of the life of the property.

Answer 10

SINKING FUND METHOD

Question 11

The depreciation charge in this method is assumed to vary directly to the number of years and inversely to the sum of the year’s digit.

Answer 11

SUM OF THE YEARS DIGIT METHOD

Question 12

This method is based on the compound interest formula,
𝐹 = 𝑃 (1 + 𝑖 )^n , where P is the first cost, F is the book value at anytime, and i is the depreciation rate and is equal to–K

Answer 12

DECLINING BALANCE METHOD

Question 13

Depreciation charge to date = 2n x BV at the beginning of the year.

Answer 13

DOUBLE DECLINING BALANCE METHOD

Question 14

the process of gradually recouping the initial
investment made in an asset over its useful life. This concept forunderstanding how to allocate costs and evaluate thefinancial performance of investments.

Answer 14

CAPITAL RECOVERY

Question 15

performed to determine the value of a variable or parameter of a project or alternate that makes two elements equal, for example, the sales volume that will equate revenues and cost.

Answer 15

BREAK-EVEN ANALYSIS

Question 16

a method of determining the required quantity (breakeven quantity) such that cost equals the revenue. Furthermore, it helps us find out losses or profit in an investment, thus if the sold item is less than the breakeven quantity then loss is incurred but if sold item is greater than the breakeven quantity then profit is incurred.

Answer 16

BREAK-EVEN ANALYSIS

Question 17

a written contract pay a certain redemption value R on a specified redemption date to pay equal
dividends D periodically.

Answer 17

BOND