4 - Components of the Ownership Cost
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Practice Questions
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What does the term ownership cost include?
💡 Hint: Remember the acronym IDEITS.
Define initial cost.
💡 Hint: Think about all costs before using the equipment.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is a key component of ownership costs?
💡 Hint: Which cost remains irrespective of operation?
True or False: Depreciation only affects the cash flow of the business.
💡 Hint: Consider how depreciation is recorded.
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Challenge Problems
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A construction company purchases a crane for $250,000 with a salvage value of $50,000 and a useful life of 15 years. Calculate the annual depreciation using each method discussed.
💡 Hint: Remember to account for the salvage value in Straight Line and don't in Double Declining.
Discuss potential consequences if a contractor fails to estimate ownership costs accurately when bidding for a project.
💡 Hint: Reflect on project sustainability and financial viability.
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