Question

What is cost recovery and when is it used – name 3 different types of cost recovery.

Answer 1

Cost recovery is the concept where recovery of expenses related to a investment can be measured.

Formula for Cost Recovery is Total Revenue From an Investment divided by Total Expenditure on that investment.

COst recovery generally used in Investments or projects.(New Layouts) However Cost recovery can give you a true picture of recovery of costs of any expenses at any point of time in a business.

Three Different types of Cost recovery:

1. On investment: We calculate ROI to know about cost recovery of Intial Expenses of Investment.

2. Cost of Capital: InTaking Finance COst of capital ALso calculated for checking its recovering or not.

3.Intial Layouts- Intially business recovered its cost first and calculate breakeven point.