3.1 - Defining Equipment Life
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Practice Questions
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Define economic useful life in your own words.
💡 Hint: Think about how costs change over time.
What is obsolescence?
💡 Hint: Consider examples of dated technology.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary focus of economic useful life?
💡 Hint: Consider what economic analysis typically seeks to achieve.
True or False: Profit life continues indefinitely until the machine breaks down.
💡 Hint: Think about how equipment performance changes over time.
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Challenge Problems
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A construction company owns an excavator that has been working for 8 years, with increasing repair costs. If the descent in profitability starts at 10 years, discuss the company's options as the machine approaches its economic useful life.
💡 Hint: Consider competitive analysis and potential market offerings.
Determine a replacement policy for a fleet of old trucks, given their maintenance costs escalating annually, compared to new models entering the market with lower costs.
💡 Hint: Make use of financial projection models.
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