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Test your understanding with targeted questions related to the topic.
Question 1
Easy
What does EAC stand for?
💡 Hint: Think about the definition of annualized cost.
Question 2
Easy
Define USCRF in relation to EAC.
💡 Hint: It's a method of recovery over time.
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 purpose of calculating the EAC?
💡 Hint: Think about how businesses choose to manage equipment.
Question 2
True or False: The EAC is only focused on the purchase price of the equipment.
💡 Hint: Recall the definition of EAC.
Solve 1 more question and get performance evaluation
Push your limits with challenges.
Question 1
A company has a machine with a purchase price of 1,500,000 rupees, an expected life of 5 years, an O&M cost of 200,000 rupees per year, and a salvage value of 100,000 rupees. Calculate the EAC if the USCRF is 0.25.
💡 Hint: Break down the problem into parts: calculate EAC then adjust for O&M and salvage.
Question 2
Analyze how the firm's decision to ignore salvage value might affect their assessment of a machine's cost-effectiveness, using an example.
💡 Hint: Think critically about cash flows and their implications.
Challenge and get performance evaluation