1.2 - Recap of Previous Lecture
Enroll to start learning
You’ve not yet enrolled in this course. Please enroll for free to listen to audio lessons, classroom podcasts and take practice test.
Practice Questions
Test your understanding with targeted questions
What is replacement analysis?
💡 Hint: Think about cost versus profits.
What is the importance of market value in replacement analysis?
💡 Hint: Consider the third-party perspective.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What does replacement analysis aim to achieve?
💡 Hint: Focus on the main goal of the analysis.
True or False: The initial purchase price is crucial when considering the replacement of equipment from a third-party perspective.
💡 Hint: Think about a third-party's concern.
1 more question available
Challenge Problems
Push your limits with advanced challenges
A construction company has a bulldozer with a current market value of $25,000 and an estimated operating cost increase of $5,000 per year after 3 years. Calculate its economic life considering a new bulldozer costs $50,000 with an operating cost of $2,000 per year.
💡 Hint: Break down costs year by year.
Given that a machine has depreciated to $15,000, calculate the implications of its book value (of $10,000) versus its current market value if operational costs rise significantly. When should it be replaced?
💡 Hint: Focus on the break-even point for operational costs.
Get performance evaluation
Reference links
Supplementary resources to enhance your learning experience.