Practice Working out a Problem for Economic Life - 3 | 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 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

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the primary goal of replacement analysis?

  • To maximize initial investments
  • To determine optimal replacement timing
  • To calculate resale value

💡 Hint: Remember, it's about timing!

Question 2

True or False: Sunk costs are relevant to future financial decisions.

  • True
  • False

💡 Hint: Focus on analyzing only current and future costs.

Solve 1 more question and get performance evaluation

Challenge Problems

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