An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the__________________?
Correct answer: B. Depreciation by sinking fund method
- A. Manufacturing cost
- B. Depreciation by sinking fund method
- C. Discrete compound interest
- D. Cash ratio
Explanation
The sinking-fund depreciation method deposits equal periodic amounts so that, with interest accumulation, the total reaches the required depreciable value at the equipment's end of life. This is precisely an ordinary-annuity calculation.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
Practise Plant Design and Economics
803 free Plant Design and Economics MCQs from Chemical Engineering, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Chemical Engineering questions like this
Chemical Engineering is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Plant Design and Economics questions
With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project ?
The amount of simple interest during 'n' interest period is (where, i = interest rate based on the length of one interest period, p = principal) ?
'Lang factor' is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of 'Lang factor' for fixed capital investment, for a solid-fluid processing chemical plant ranges from ?
Utilities cost in the operation of chemical process plant comes under the ?
The depreciation during the year 'n', in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage 'N' to the ?
If the interest rate of 10% per period is compounded half yearly, the actual annual return on the principal will be ______________ percent ?