Practice Repair and Maintenance - 3.2.3 | 12. Equipment cost – Caterpillar and Peurifoy method | Construction Engineering & Management - Vol 1
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3.2.3 - Repair and Maintenance

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the formula for calculating depreciation using the straight-line method?

💡 Hint: Think about how we define the useful life of equipment.

Question 2

Easy

Name two components of ownership cost.

💡 Hint: Consider what costs are involved in owning equipment.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the first step in estimating ownership costs using the Caterpillar method?

  • Estimate depreciation
  • Calculate operating costs
  • Determine salvage value

💡 Hint: Remember, ownership costs start with ownership!

Question 2

True or False: Operating costs can include estimates for fuel, maintenance, and labor.

  • True
  • False

💡 Hint: Think about the definition of operating costs here.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

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.

Question 2

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.

Challenge and get performance evaluation