Practice - Estimation of Ownership Costs
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Practice Questions
Test your understanding with targeted questions
What does the cost of investment represent?
💡 Hint: Think about what capital costs involve and how they are calculated.
What percentage range is typical for insurance costs?
💡 Hint: Recall the common range mentioned in the text.
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Interactive Quizzes
Quick quizzes to reinforce your learning
The cost of investment includes which of the following?
💡 Hint: Think about what constitutes costs associated with funds used for investment.
True or False: Ownership costs only include the purchase price of equipment.
💡 Hint: Consider all aspects of costs involved beyond just the initial purchase.
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Challenge Problems
Push your limits with advanced challenges
You have a piece of machinery with a purchase price of ₹ 100,000, a salvage value of ₹ 20,000, a useful life of 10 years, and an insurance cost of 2%. Calculate the total ownership cost over its useful life.
💡 Hint: Break down each step and calculate each cost over the machinery’s useful life.
A machine costs ₹ 250,000, has a salvage value of ₹ 30,000, and an expected life of 5 years. If you'd finance through a loan at 6%, calculate the cost of investment and total ownership cost, including insurance (1%) and taxes (2%).
💡 Hint: Identify and sum all cost components to find the total ownership cost for the machine.
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