2 - Components of Ownership Cost
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Practice Questions
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Define investment cost.
💡 Hint: Think about what costs are involved in purchasing machinery.
What is the typical range for insurance costs?
💡 Hint: Remember, insurance is a percentage of the asset's value.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary factor in determining investment cost?
💡 Hint: Consider how loans influence costs.
True or False: Storage costs are only applicable when the equipment is in use.
💡 Hint: Reflect on how storage operates in machinery management.
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Challenge Problems
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A machine valued at $50,000 incurs an investment cost of 8%. Additionally, the insurance cost is set at 1.5%, and property taxes at 3%. If storage is 0.8%, calculate the total ownership cost.
💡 Hint: Consider calculating each component individually and then summing them up.
Discuss how neglecting the storage costs can affect the estimated ownership cost over a year, especially for a construction firm.
💡 Hint: Think about how many days equipment needs to be stored and secured.
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