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Test your understanding with targeted questions related to the topic.
Question 1
Easy
What is replacement analysis?
💡 Hint: Focus on its purpose in financial decisions.
Question 2
Easy
Define the term 'market value'.
💡 Hint: Think about how an asset's worth is evaluated today.
Practice 4 more questions and get performance evaluation
Engage in quick quizzes to reinforce what you've learned and check your comprehension.
Question 1
What is the primary goal of replacement analysis?
💡 Hint: Remember, it's about timing!
Question 2
True or False: Sunk costs are relevant to future financial decisions.
💡 Hint: Focus on analyzing only current and future costs.
Solve 1 more question and get performance evaluation
Push your limits with challenges.
Question 1
A construction company is analyzing whether to replace a bulldozer bought for $200,000. It has an annual operating cost of $50,000. If its average resale value decreases to $90,000 after the first year, calculate the EAC and determine if it should be replaced.
💡 Hint: Use present worth factors to determine EAC over the useful life of the bulldozer.
Question 2
A firm is deciding whether to keep an old crane with a persistent annual maintenance cost of $30,000. New models cost $150,000 with an expected annual operating cost of $10,000. Calculate EAC and discuss potential benefits.
💡 Hint: Consider running calculations over the crane’s anticipated useful life.
Challenge and get performance evaluation