Practice Calculating EAC for Purchase Price - 2.3 | 19. Equipment Life and Replacement Analysis (Part 3) | Construction Engineering & Management - Vol 1
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Knowledge

2.3 - Calculating EAC for Purchase Price

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What does EAC stand for?

💡 Hint: Think about the annual cost of owning equipment.

Question 2

Easy

Why is salvage value important in EAC calculations?

💡 Hint: Consider how end-of-life sells impact overall ownership costs.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What does the acronym EAC represent?

  • Expected Annual Cost
  • Equivalent Annual Cost
  • Estimated Average Cost

💡 Hint: Reflect on annual costs related to equipment management.

Question 2

Is salvage value considered when calculating total costs for EAC?

  • True
  • False

💡 Hint: Think about the future resale and its financial retrieval.

Solve and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company purchases a machine for $45,000, expects a salvage value of $8,000, and projects annual operating costs to rise from $1,500 to $3,000 over 6 years. Calculate the economic life of the machine using EAC.

💡 Hint: Take multiple years of operation into account along with the salvage value.

Question 2

If a construction firm has two machines with different purchase prices of $50,000 and $40,000, both with similar operating costs but differing salvage values, explain which machine they should choose based on EAC principles.

💡 Hint: Focus on the whole lifecycle, including sale prices, while weighing initial costs against efficiencies.

Challenge and get performance evaluation