2.2.3 - Tire Cost
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Practice Questions
Test your understanding with targeted questions
What are the two main components of equipment costs discussed in this section?
💡 Hint: Think of what costs are incurred directly from owning equipment.
How is depreciation for tires calculated?
💡 Hint: Consider the formula provided in the lesson.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary method to estimate ownership cost?
💡 Hint: Focus on the terminology used in the lesson.
Is the Peurifoy Method concerned with cash flow timing?
💡 Hint: Reflect on the key elements of the method you learned.
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Challenge Problems
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A construction company is budgeting for an excavator with an initial tire cost of $10,000 and a salvage value of $2,000 over a life span of 6,000 hours. Calculate the tire depreciation cost per hour. Additionally, if market prices increase the replacement cost to $12,000, how would it impact the operational cost?
💡 Hint: Follow the depreciation formula and assess how changes in costs will impact your hourly projections.
Analyze a scenario where you have to compare two different tire models for an excavator; one costs $9,000 with a lifespan of 4,000 hours and the other costs $12,000 with a lifespan of 5,000 hours. Which one would be more cost-effective and why?
💡 Hint: Evaluate the cost per hour to determine which tire model is financially smarter over its productive life.
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