2.3 - Obsolescence Costs
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Practice Questions
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Define economic life in relation to machinery.
💡 Hint: Consider the balancing of operating costs.
What are obsolescence costs?
💡 Hint: Think about the influence of technology.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is economic life?
💡 Hint: It relates to the balance of repairs and operating expenses.
True or False: Downtime costs increase with the age of the machine.
💡 Hint: Consider how repairs affect work efficiency.
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Challenge Problems
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You have a machine worth 35,00,000 with a useful life of 8 years. Calculate its estimated obsolescence costs at year 5, considering a 10% obsolescence per year.
💡 Hint: Think about applying the percentage to the original value directly.
Given the costs of maintenance increase by 10% annually starting at 2,00,000, calculate the total maintenance cost at the end of 4 years.
💡 Hint: Use geometric progression to help in calculating total growth over multiple years.
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