9.1. Working on an Illustration

Try these first

1. 1.

   What is the first phase in the equipment life cycle?

   Hint

   It begins with acquiring the machine.

2. 2.

   Define downtime in the context of equipment.

   Hint

   Consider repairs or maintenance when answering.

3. 3.

   What does economic useful life refer to?

   • The time period before a machine fails
   • The period of minimum costs or maximum profits
   • The age of the machine

   Hint

   Think about both cost and profits in terms of timing.

4. 4.

   True or False: Downtime refers to the time when machinery is under maintenance.

   • True
   • False

   Hint

   Consider machinery's operational status.

5. 5.

   Imagine you have two machines: Machine A with minimal repair costs for the next two years and Machine B with increasing costs. How do you decide when to replace?

   Hint

   Review cost trends and project future expenses.

6. 6.

   A machine was purchased 5 years ago for $50,000. Its operational cost is rising by 10% annually. Calculate the future value of this machine after another 5 years considering inflation.

   Hint

   Include the compounding effect in your calculations.