Lakshya Education MCQs

Question: A machine has an initial value of Rs. 5000, service life of 5 years and final salvage value of Rs. 1000. The annual depreciation cost by straight line method is Rs.
Answer: Option C

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Question 1. Fixed charges for a chemical plant does not include the
  1.    Interest on borrowed money
  2.    Rent of land and buildings
  3.    Property tax, insurance and depreciation
  4.    Repair and maintenance charges
Answer: Option D
Question 2. Which of the following is not a component of working capital?
  1.    Raw materials is stock
  2.    Finished products in stock
  3.    Transportation facilities
  4.    Semi-finished products in the process
Answer: Option C
Question 3. Functional depreciation of an equipment is the measure of decrease in its value due to its
  1.    Ageing
  2.    Wear and tear
  3.    Obsolescence
  4.    Breakdown or accident
Answer: Option C
Question 4. For a typical project, the cumulative cash flow is zero at the
  1.    End of the project life
  2.    Break even point
  3.    Start up
  4.    End of the design stage
Answer: Option B
Question 5. An investment of Rs. 100 lakhs is to be made for construction of a plant, which will take two years to start production. The annual profit from the operation of the plant is Rs. 20 lakhs. What will be the pay back time?
  1.    5 years
  2.    7 years
  3.    12 years
  4.    10 years
Answer: Option A
Question 6. The total investment in a project is Rs. 10 lakhs and the annual profit is 1.5 lakhs. If the project life is 10 years, then the simple rate of return on investment is
  1.    15%
  2.    10%
  3.    1.5%
  4.    150%
Answer: Option C

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