3.1 - Ownership Cost
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Practice Questions
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What is depreciation?
💡 Hint: Consider how value decreases over time.
What are the main components of ownership cost?
💡 Hint: Think about the different costs associated with owning equipment.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary goal of calculating ownership costs?
💡 Hint: What do you need to budget for when using equipment?
True or False: The Peurifoy method disregards the timing of cash flows.
💡 Hint: Consider what the time value of money really means.
1 more question available
Challenge Problems
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A construction company acquires a new backhoe for $150,000. If the expected salvage value is $30,000 and the estimated useful life is 10,000 hours, calculate the hourly depreciation using both the Caterpillar and Peurifoy methods.
💡 Hint: Establish the depreciation first, then add nuances from Peurifoy.
Discuss how changing the interest rate from 5% to 10% would affect total cost estimation under Peurifoy's method.
💡 Hint: Think about how finance costs link with cash timing in construction.
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