CAFM Financial Management & Budgeting 4

Question 1

A fleet manager is evaluating two vehicle models. Model A has lower purchase price but higher fuel and maintenance costs. The BEST way to make a financially sound choice is to compare:

Accepted Answer

Total cost of ownership over the planned lifecycle

Answer

Sticker price only

Answer

First-year depreciation only

Answer

Miles per gallon rating only

Question 2

Which statement BEST describes the concept of 'optimum replacement cycle' in fleet management?

Accepted Answer

The point where the combined ownership and operating costs per mile are minimized

Answer

Replacing vehicles on a fixed calendar schedule regardless of condition

Answer

The point at which a vehicle has zero book value

Answer

Replacing vehicles whenever a driver requests a newer model

Question 3

A fleet manager notices fuel spend is 12% above budget mid-year. The FIRST corrective action should be to:

Accepted Answer

Analyze root causes such as route inefficiency, idling, or fuel card misuse

Answer

Immediately replace all vehicles with hybrids

Answer

Reduce the fuel budget for the second half of the year

Answer

Suspend all non-essential travel immediately

Question 4

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

Accepted Answer

Purchase of a new service truck

Answer

Monthly fuel card payments

Answer

Annual insurance renewal

Answer

Quarterly tire rotation service

Question 5

What is the main advantage of using internal rate of return (IRR) when evaluating a fleet technology investment?

Accepted Answer

It expresses profitability as a percentage, allowing easy comparison to a hurdle rate

Answer

It ignores the time value of money for simplicity

Answer

It only considers first-year savings

Answer

It eliminates the need for a discount rate assumption

Question 6

A 'lifecycle cost model' for fleet vehicles is PRIMARILY used to:

Accepted Answer

Project and compare total costs across different vehicle options and holding periods

Answer

Determine daily driver assignments

Answer

Set quarterly maintenance schedules

Answer

Calculate payroll for fleet technicians

Question 7

Under a closed-end vehicle lease, the fleet operator's financial exposure at lease termination is limited to:

Accepted Answer

Any excess mileage or damage charges beyond contract terms

Answer

The full residual value of the vehicle

Answer

The market value depreciation during the lease

Answer

All maintenance costs incurred during the lease