4.3 - New Estimates and Remaining Life Considerations
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 yearly financial metrics.
What is the formula for calculating EAC?
💡 Hint: Consider how we break down total costs.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What does EAC help determine?
💡 Hint: Think about yearly payments.
Is resale value considered a cash outflow?
💡 Hint: Consider how we account cash inflows and costs.
Get performance evaluation
Challenge Problems
Push your limits with advanced challenges
Calculate the total EAC for a piece of machinery with a purchase price of 8,000,000, an expected annual operating cost of 200,000, a salvage value of 1,000,000, with a useful life of 7 years at an annual interest rate of 5%.
💡 Hint: Factor in USCRF calculations and do adjustments for salvage.
Discuss how a change in salvage value from 1,500,000 to 2,000,000 alters the economic analysis and decision on equipment replacement.
💡 Hint: Assess the financial impact through cash flow implications.
Get performance evaluation
Reference links
Supplementary resources to enhance your learning experience.