1.3 - Outline of Today's Presentation
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Practice Questions
Test your understanding with targeted questions
What is replacement analysis?
💡 Hint: Think about the main goal of financial decision-making.
Define sunk cost.
💡 Hint: Consider costs in terms of past investments.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the main goal of replacement analysis?
💡 Hint: Think about the objectives outlined in the lecture.
True or False: Sunk costs should influence current investment decisions.
💡 Hint: Reflect on why past expenses shouldn't sway current choices.
2 more questions available
Challenge Problems
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A construction company owns an excavator with increasing maintenance costs. Given its resale value of $50,000 and annual operating costs increasing by $2,000, what factors should be analyzed to determine if they should replace or keep the excavator?
💡 Hint: Think about costs over time and should factor in potential savings and efficiency from newer machinery.
Analyze a scenario where a firm must evaluate two competing machines for replacement. One has operational costs that rise sharply as it ages, while the other has stable costs. How does this affect your choice?
💡 Hint: Assess long-term trends in operations costs versus initial investment.
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