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Practice Questions
Test your understanding with targeted questions related to the topic.
Question 1
Easy
Define Equivalent Annual Cost (EAC).
💡 Hint: What does EAC facilitate in decision-making?
Question 2
Easy
What is a sunk cost?
💡 Hint: Think about costs from past decisions.
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 is considered when estimating EAC?
- Initial price
- Salvage value
- Operational costs
- All of the above
💡 Hint: Think about everything that affects total costs.
Question 2
Can sunk costs affect your future investment decisions?
- True
- False
💡 Hint: Consider what influence past costs have on present decisions.
Solve 1 more question and get performance evaluation
Challenge Problems
Push your limits with challenges.
Question 1
You have an old loader purchased for $45,000 with a salvage value of $8,000. Operating costs begin at $3,500 per year, and increase by $500 annually. Compute the EAC for year 1 and year 2. Determine in which year the loader should ideally be replaced based on your findings.
💡 Hint: Be sure you understand how operating costs are increasing over the years.
Challenge and get performance evaluation