CAFM Financial Management 3

Question 1

What does a fleet's 'cost per mile' metric fail to capture that 'cost per unit of work' would better reflect?

Accepted Answer

Productivity and mission effectiveness of each vehicle

Answer

Cost per unit of work ties fleet expense to actual output (deliveries, service calls), revealing productivity differences that mileage alone cannot show.

Question 2

Which of the following is an example of a capital expenditure (CapEx) in fleet management?

Accepted Answer

Purchasing a new service vehicle outright

Answer

Purchasing a vehicle outright is a capital expenditure because it acquires a long-term asset that is depreciated over its useful life.

Question 3

A fleet manager wants to justify adding one maintenance technician. Which financial document would best support this request?

Accepted Answer

Cost-benefit analysis comparing technician salary to outsourced repair costs

Answer

A cost-benefit analysis quantifies the financial return of adding in-house staff versus continuing to outsource, providing the justification leadership needs.

Question 4

Which term describes the interest rate that makes the net present value of all cash flows from a fleet investment equal to zero?

Accepted Answer

Internal Rate of Return (IRR)

Answer

The Internal Rate of Return (IRR) is the break-even discount rate at which an investment's NPV equals zero, used to compare investment attractiveness.

Question 5

A zero-based budget approach in fleet management requires managers to:

Accepted Answer

Justify every expense from scratch each budget cycle

Answer

Zero-based budgeting requires all expenses to be justified anew each period rather than using prior-year spending as a baseline.

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM Financial Management 3