7.3 - Economic Life
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Practice Questions
Test your understanding with targeted questions
Define 'economic life' in the context of construction equipment.
💡 Hint: Think about the relationship between cost and machine usage.
What is the difference between defender and challenger?
💡 Hint: Consider which machine is being used and which one is being considered.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary goal of replacement analysis?
💡 Hint: Consider what we are trying to achieve with replacement decisions.
True or False: Economic life ends when equipment can no longer operate.
💡 Hint: Think about cost relationships, not just equipment function.
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Challenge Problems
Push your limits with advanced challenges
Calculate the economic life of a piece of equipment that has an initial cost of $100,000, an increasing repair cost of $10,000 annually, and expected returns decreasing by $5,000 per year.
💡 Hint: Set up an equation where total returns minus total costs gives you the breakeven point.
A construction company has two excavators: one (old) incurs high repairs costing $15,000 annual, while the other (new) has a lower repair cost of $5,000 and higher efficiency. Discuss whether to replace the old one.
💡 Hint: Think about long-term cost versus short-term savings.
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