Practice Equivalent Annual Cost Calculation - 1 | 20. Equivalent Annual Cost Calculation | 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 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

Interactive Quizzes

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

Question 1

What is the purpose of calculating the EAC?

  • To determine total costs
  • To minimize accounting inaccuracies
  • To compare replacement options

💡 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.

  • True
  • False

💡 Hint: Recall the definition of EAC.

Solve 1 more question and get performance evaluation

Challenge Problems

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