AMP AMP Capital Investment & Decision Making

Question 1

Total Cost of Ownership (TCO) in asset management includes which of the following?

Accepted Answer

Purchase, operation, maintenance, and disposal costs

Answer

Purchase price only

Answer

Depreciation and insurance costs only

Answer

Installation and commissioning costs only

Question 2

Net Present Value (NPV) is used in capital investment decisions to:

Accepted Answer

Determine the current value of future cash flows from an asset

Answer

Calculate the payback period of an investment

Answer

Estimate asset depreciation for tax purposes

Answer

Measure the internal rate of return on equity

Question 3

Which capital budgeting technique identifies the discount rate at which an investment's NPV equals zero?

Accepted Answer

Internal Rate of Return (IRR)

Answer

Payback period

Answer

Return on assets (ROA)

Answer

Profitability index

Question 4

In asset investment planning, a 'capital expenditure' (CapEx) refers to:

Accepted Answer

Funds used to acquire, upgrade, or maintain long-term physical assets

Answer

Day-to-day operating expenses like utilities

Answer

Short-term procurement of consumable supplies

Answer

Labor costs for maintenance crews

Question 5

A replacement decision model in asset management typically compares:

Accepted Answer

Marginal cost of keeping the old asset versus cost of acquiring a new one

Answer

New asset acquisition cost versus salvage value only

Answer

Vendor pricing across three suppliers

Answer

Asset age versus manufacturer warranty period

Question 6

Which term describes the minimum acceptable rate of return required before an organization will invest in a project?

Accepted Answer

Hurdle rate

Answer

Discount rate

Answer

Salvage rate

Answer

Payback threshold