3.2.3 - Repair and Maintenance
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Practice Questions
Test your understanding with targeted questions
What is the formula for calculating depreciation using the straight-line method?
💡 Hint: Think about how we define the useful life of equipment.
Name two components of ownership cost.
💡 Hint: Consider what costs are involved in owning equipment.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the first step in estimating ownership costs using the Caterpillar method?
💡 Hint: Remember, ownership costs start with ownership!
True or False: Operating costs can include estimates for fuel, maintenance, and labor.
💡 Hint: Think about the definition of operating costs here.
2 more questions available
Challenge Problems
Push your limits with advanced challenges
Calculate the total ownership cost of a piece of heavy equipment, given the initial cost is $100,000, a salvage value of $20,000, a depreciation time of 10,000 hours, and additional costs of taxes at 5% and insurance at 2%. Provide a detailed breakdown of your calculations.
💡 Hint: Break down your calculations step by step by first determining each individual cost component.
Using the Peurifoy method, analyze how cash flows are transformed into equivalent annual costs for a piece of equipment valued at $85,000 with a salvage value of $15,000 over 5 years and a 10% interest rate. Show your formulae and key calculations.
💡 Hint: Make sure to define your interest rate and understand the use of both recovery and sinking fund factors in this context.
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