1.9 - Conversion to Present Worth Factor for Resale Value
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 does EAC stand for?
💡 Hint: Think about what each letter represents.
What is the purpose of calculating a present worth factor?
💡 Hint: Consider why present value is critical in financial decision-making.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What does EAC stand for?
💡 Hint: Consider the yearly nature of costs.
True or False: The present worth factor only applies to costs encountered in the present.
💡 Hint: Think about the purpose of present worth factors.
Get performance evaluation
Challenge Problems
Push your limits with advanced challenges
A new machine costs 5,000,000 rupees, and it has an expected life of 8 years with a salvage value of 1,000,000. What is the EAC at an interest rate of 10%?
💡 Hint: Consider both purchase cost and disposal value during the calculation.
Calculate the total EAC for two machines: Machine A costs 3,000,000 rupees with no salvage value, while Machine B costs 3,500,000 rupees with a salvage value of 500,000, both with a lifespan of 5 years and an interest rate of 12%. Which is better?
💡 Hint: Account for both purchase price and estimated salvage values.
Get performance evaluation
Reference links
Supplementary resources to enhance your learning experience.