5.1. Definition

Try these first

1. 1.

   Define equipment life.

   Hint

   Think about what phases equipment goes through.

2. 2.

   What is a defender in equipment terminology?

   Hint

   Consider the existing machinery before replacement.

3. 3.

   What is economic useful life?

   • Time of minimal costs
   • Time of maximum costs
   • Time of inefficient operation

   Hint

   Think about optimizing profit.

4. 4.

   True or False: The defender refers to the proposed new equipment.

   • True
   • False

   Hint

   Which term relates to existing machinery?

5. 5.

   A construction company has an excavator that costs $80,000 and incurs an annual operating cost of$15,000. Calculate when it is economically advisable to replace the excavator assuming no significant technological advancements.

   Hint

   Assess repair and operational costs over multiple years.

6. 6.

   Discuss the impact of market obsolescence on the decision to retain or replace a bulldozer that, although functional, has become substantially less efficient compared to newer models.

   Hint

   Consider the associated costs: downtime and repairs versus possible productivity gains from new models.