1.2 - Example of Estimating Economic Life
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Practice Questions
Test your understanding with targeted questions
Define economic life in the context of machinery.
💡 Hint: Think about the time frame for machine efficiency.
What is depreciation?
💡 Hint: Consider how machinery loses value.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is economic life?
💡 Hint: Think about when owning a machine is most efficient.
True or False: Depreciation does not affect replacement costs.
💡 Hint: Consider how machinery's value changes over time.
2 more questions available
Challenge Problems
Push your limits with advanced challenges
Given a machine with a purchase price of ₹50,00,000, a salvage value of ₹5,00,000, inflation of 4% annually, and a depreciation rate of 20%, calculate when the optimal replacement year would be for minimal costs over a 5-year period.
💡 Hint: Break down the calculations year by year for clarity.
Create a comprehensive report analyzing three different machines with differing economic lives, costs, and salvage values to determine which should be replaced first, using cumulative cost analysis.
💡 Hint: Include all associated costs and evaluate them relative to their age.
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