1.8 - Cost Variation with Age of Equipment
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Practice Questions
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What are the two main types of costs associated with construction equipment?
💡 Hint: Think of recurring expenses throughout the equipment's life.
What does economic life refer to?
💡 Hint: Consider when costs start rising.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What happens to operating costs as equipment ages?
💡 Hint: Think about wear and tear over time.
The economic life is defined as the point where total costs are at their...?
💡 Hint: Consider when it might be most efficient to replace equipment.
1 more question available
Challenge Problems
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Consider a company that has two excavators. One is 5 years old with increasing maintenance costs, and another just purchased. Analyze the potential savings if the older excavator is replaced this year instead of next.
💡 Hint: Break down the costs year by year for clarity.
You manage equipment for a construction firm. If you know that the operational cost for each year increases by 12%, and maintenance starts at $15,000 for a new machine, what would be the average annual cost over a 10-year span if the economic life is reached?
💡 Hint: Apply the formula for geometric sums!
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