2.3 - Storage Costs
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Practice Questions
Test your understanding with targeted questions
Define investment costs in your own words.
💡 Hint: Think about purchase and any associated interest.
What are storage costs?
💡 Hint: Consider maintenance and security.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What represents the annual cost of capital invested in a machine?
💡 Hint: Refer back to the definition of investment costs we discussed.
True or False: The Average Annual Investment Method accounts for cash flow timings.
💡 Hint: Remember our segmentation of these two methods.
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Challenge Problems
Push your limits with advanced challenges
A construction company buys a crane for $120,000 and expects a salvage value of $15,000 after 10 years. Calculate the average annual investment. Discuss implications on project costs if this calculation is incorrect.
💡 Hint: Utilize the average annual investment formula from our last class.
A project manager mistakenly underestimates the storage costs of machinery. What steps should they take to reassess and correct the budget?
💡 Hint: Revisit the cost components we discussed and analyze each.
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Reference links
Supplementary resources to enhance your learning experience.
- Understanding Ownership Costs in Project Management
- Maximizing Equipment Ownership Cost Effectiveness
- Depreciation and Taxes Explained
- Investment Costs and Financial Analysis
- Time Value of Money Overview
- Calculating Insurance for Equipment
- Value Depreciation in Business Equipment
- Average Annual Investment Method for Equipment
- Cash Flow and Equipment Ownership
- What is Ownership Cost?