CM 2113 2026 PROJECT PLANNING AND
SCHEDULING MASTER REVIEW
◉A contractor is considering the purchase of a new dump truck at a
cost of $85,000. Annual maintenance and repair costs are estimated
to be $4,000 per year. The truck would be used for 8 years and then
sold for an estimated salvage value of $10,000. The contractor
estimates that the annual income generated by the truck will be
$16,000 per year. What is the prospective rate of return for this
investment?. Answer: For P where i is unknown
$85,000 + $4,000 (P/A,i,8) = $16,000(P/A,i,8) + $10,000 (P/F,i,8)
Subtract $4,000 (P/A,i,8) from each side
$85,000 = $12,000(P/A,i,8) + $10,000 (P/F,i,8)
Trial and Error using 5% and then 4%
◉A decrease in value
○ Market value
○ Value to the owner
○ To offset income for tax purpose. Answer: Depreciation
◉the value at the time of
, disposal or retirement. Answer: Salvage value
◉initial cost less the depreciation to the equipment. Answer: Book
value
◉subtracted from business revenues as they occur.
■ Labor
■ Utilities
■ Materials
■ Insurance, etc.. Answer: Expenses
◉subtracted from business expenses over time as the asset is used
up until the book value equals the salvage value. No further
depreciation is allowed.. Answer: Depreciation
◉the period over which an asset is depreciated (=recovery period)..
Answer: Depreciation period
◉purchase price less salvage value. Answer: Depreciable value
◉Depreciation is used to allocate an asset's ____ of value over time..
Answer: loss
SCHEDULING MASTER REVIEW
◉A contractor is considering the purchase of a new dump truck at a
cost of $85,000. Annual maintenance and repair costs are estimated
to be $4,000 per year. The truck would be used for 8 years and then
sold for an estimated salvage value of $10,000. The contractor
estimates that the annual income generated by the truck will be
$16,000 per year. What is the prospective rate of return for this
investment?. Answer: For P where i is unknown
$85,000 + $4,000 (P/A,i,8) = $16,000(P/A,i,8) + $10,000 (P/F,i,8)
Subtract $4,000 (P/A,i,8) from each side
$85,000 = $12,000(P/A,i,8) + $10,000 (P/F,i,8)
Trial and Error using 5% and then 4%
◉A decrease in value
○ Market value
○ Value to the owner
○ To offset income for tax purpose. Answer: Depreciation
◉the value at the time of
, disposal or retirement. Answer: Salvage value
◉initial cost less the depreciation to the equipment. Answer: Book
value
◉subtracted from business revenues as they occur.
■ Labor
■ Utilities
■ Materials
■ Insurance, etc.. Answer: Expenses
◉subtracted from business expenses over time as the asset is used
up until the book value equals the salvage value. No further
depreciation is allowed.. Answer: Depreciation
◉the period over which an asset is depreciated (=recovery period)..
Answer: Depreciation period
◉purchase price less salvage value. Answer: Depreciable value
◉Depreciation is used to allocate an asset's ____ of value over time..
Answer: loss
