Civil Engineering MCQAE Level Civil Engineering
Sinking fund method of depreciation assumes that:
Estimation and CostingConstruction Materials, Practices, Planning and ManagementHARD
Choose the correct answer
A
annual depreciation is constant with no interest
B
depreciation equals repair cost
C
asset value never changes
D
periodic deposits earn compound interest to replace the asset
Correct Answer
D. periodic deposits earn compound interest to replace the asset
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A fixed annual amount is invested at compound interest so that accumulated fund equals replacement cost at the end of life.
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