5.2 - Cumulative Maintenance Costs
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Practice Questions
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What is economic life?
💡 Hint: Think about when holding costs are minimized.
Define depreciation.
💡 Hint: It's a way to measure an asset's declining worth.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the economic life of machinery?
💡 Hint: Focus on cost-effectiveness.
True or False: Downtime costs decrease as the machine's age increases.
💡 Hint: Think about how older machines perform.
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Challenge Problems
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A company has machinery that was purchased for 50,00,000 with a useful life of 10 years. Calculate the depreciation for Year 1 and Year 2 using the double declining balance method.
💡 Hint: Apply the formula to find the book value each year.
Calculate the cumulative maintenance costs if yearly repair costs are estimated to start at 1,00,000 and increase by 5% annually. Determine the cumulative cost after five years.
💡 Hint: Add each year's increasing repair cost to find the total.
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