Practice Calculating EAC for Salvage Value - 2.4 | 19. Equipment Life and Replacement Analysis (Part 3) | Construction Engineering & Management - Vol 1
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Knowledge

2.4 - Calculating EAC for Salvage Value

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

Define Economic Life.

💡 Hint: Consider the balance of costs involved.

Question 2

Easy

What is the purpose of calculating EAC?

💡 Hint: Think about consistency in cost analysis.

Practice 2 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 is the primary purpose of EAC?

  • To calculate depreciation
  • To analyze long-term capital gains
  • To standardize costs over time

💡 Hint: Think of how we ensure all costs are analyzed equally.

Question 2

True or False: Salvage value must always be included in EAC calculations.

  • True
  • False

💡 Hint: Consider how recoverable funds impact overall expenses.

Solve and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

You purchased equipment for $75,000 with a salvage value of $10,000. If expected annual maintenance costs increase from $3,000 to $15,000 over its useful life of 8 years at an interest rate of 12%, calculate the EAC.

💡 Hint: Focus on breaking apart each cost for a complete understanding.

Question 2

A new machine has an initial cost of $50,000, an expected operating cost that starts at $1,500 per year and grows by $500 annually. If the salvage value is estimated at $5,000 after 10 years with a discount rate of 8%, calculate its EAC and determine the most economically viable replacement year.

💡 Hint: Remember all costs impact the EAC calculation.

Challenge and get performance evaluation