Practice Economic Life and Equivalent Annual Cost - 1.9 | 19. Equipment Life and Replacement Analysis (Part 3) | Construction Engineering & Management - Vol 1
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Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What does EAC stand for?

💡 Hint: Think about breaking down total costs into annual terms.

Question 2

Easy

Why is market value more important than initial cost?

💡 Hint: Consider what a buyer cares about.

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 EAC help determine in equipment management?

  • The total purchase price of a machine
  • The optimal replacement time for equipment
  • The depreciation rate of machinery

💡 Hint: Think about the cost over time.

Question 2

True or False: Sunk costs should influence future replacement decisions.

  • True
  • False

💡 Hint: Consider if past expenditures matter.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A machine has an initial cost of 40,00,000 with an expected life of 6 years. The operating costs are projected to increase from 3,00,000 in year 1 to 5,00,000 in year 6. Calculate the EAC and determine if it should be replaced.

💡 Hint: Focus on calculating EAC year by year.

Question 2

Discuss the effect of failing to account for market value when analyzing equipment replacement.

💡 Hint: Consider how historical costs differ from current realities.

Challenge and get performance evaluation