# Power Plant Economics - Depreciation - MCQs with answers

## Power Plant Economics - Depreciation - MCQs with answers

Q1. The annual depreciation reserve depends on

a. Capital cost only.
b. Salvage value only.
c. On any method of calculation of depreciation factor.
d. All of these.

Q2. Depreciation charge may be based on which method?

a. Straight line method.
b. Sinking fund method.
c. Both (a) & (b).
d. None of these.

ANSWER: c. Both (a) & (b).

Q3. In a straight line method, annual depreciation charges are calculated by

a. The capital cost minus salvage value divided by the number of years of life.
b. The capital cost divided by the number of years of life.
c. Both (a) and (b).
d. None of these.

ANSWER: a. The capital cost minus salvage value divided by the number of years of life.

Q4. What is the salvage value of the plant?

a. Is always positive.
b. Is zero.
c. Is always negative.
d. May be any of these.

ANSWER: d. May be any of these.

Q5. A transformer costing Rs 90,000 haws a useful life of 20 years. Determine the annual depreciation charge using straight line method. Assume salvage to be 15,000.

a. 4000
b. 3750
c. 4350
d. 3500