1.2.2.1 - Defining Average Value of Machine
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Practice Questions
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Define investment costs in your own words.
💡 Hint: Think about what expenses come with owning machinery.
What are two sources of investment costs?
💡 Hint: Consider where the capital for machinery might come from.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does investment cost refer to?
💡 Hint: Focus on costs related to ownership.
True or False: The average annual investment method is the most precise method for calculating ownership costs.
💡 Hint: Consider how each method accounts for timing.
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Challenge Problems
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A machine's purchase price is 150 lakhs, with a salvage value of 20 lakhs over its 15-year life. Use the AAI formula to calculate the average annual investment.
💡 Hint: Follow the formula step by step.
If the total ownership cost calculation needs to include an average investment cost of 60 lakhs, insurance at 2%, taxes at 4%, and storage at 1.5%, calculate the total ownership cost for the year.
💡 Hint: Multiply the average investment by the sum of percentages to find the costs.
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