2.1. Insurance Costs

Try these first

1. 1.

   What is investment cost?

   Hint

   Think of loans or opportunity cost.

2. 2.

   How is insurance cost usually calculated?

   Hint

   Consider the type of equipment!

3. 3.

   What does the insurance cost usually range for construction equipment?

   • 1-3%
   • 5-10%
   • 2-4%

   Hint

   Think about the necessary protection!

4. 4.

   True or False: Storage costs include wages for security guards.

   • True
   • False

   Hint

   Consider all expenses incurred for equipment parking.

5. 5.

   A company invests in a piece of equipment costing $150,000 with an interest rate of 5% and an insurance cost of 3%. Calculate the overall ownership investment cost including taxes (2%) and storage (1.5%).

   Hint

   Calculate each cost separately before summing up.

6. 6.

   Calculate the total ownership cost for machinery valued at $200,000, with investment cost of 8%, insurance cost of 3%, property tax of 4% and storage of 1%.

   Hint

   Add each component cost step by step.