5 - Example on Estimating Ownership Cost
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Practice Questions
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Define ownership costs in your own words.
💡 Hint: Think about different kinds of expenditures involved.
What are investment costs?
💡 Hint: Consider both the purchase and other potential returns.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is included in ownership costs?
💡 Hint: Think about all the costs included in owning machinery.
True or False: Depreciation represents the increase in the asset's value over time.
💡 Hint: Recall what happens to the value of machines over use.
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Challenge Problems
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You acquire a machine for $100,000, with a salvage value of $10,000 over 8 years. Calculate the average annual investment cost and explain the components.
💡 Hint: Remember to include the salvage value in your calculations.
If a machine incurs storage costs of 1% of its value at $50,000, what are the annual storage costs, and how would you apply this to ownership calculations?
💡 Hint: Use percentage formulas to find the annual storage cost.
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