2 - Lecture-06 Equipment Life and Replacement Analysis (Part-1)
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Practice Questions
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What is economic useful life?
💡 Hint: Think about both costs and profits.
Define downtime costs.
💡 Hint: Consider repair scenarios.
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Interactive Quizzes
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What is the primary consideration for determining economic useful life?
💡 Hint: Think about financial outcomes.
True or False: Obsolescence cost refers solely to the depreciation of machinery.
💡 Hint: Consider different aspects of value reduction.
1 more question available
Challenge Problems
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A construction company has an old excavator that costs $5,000 annually in maintenance. A new excavator would cost $40,000 but would save the company $10,000 every year in operational efficiency due to downtime reductions. Should the company replace the old excavator? Use economic analysis to justify your answer.
💡 Hint: Weigh the long-term benefits against initial investments.
Calculate the obsolescence cost if a machine is 5 years old and has decreased from $100,000 to $70,000 in market value. What percentage value has been lost?
💡 Hint: Use the original value as a base for your percentage calculations.
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