2. Ownership Cost Calculation

Try these first

1. 1.

   Define ownership cost.

   Hint

   Think about what costs arise from having equipment in use.

2. 2.

   What is depreciation?

   Hint

   Consider how value changes as the equipment ages.

3. 3.

   What does ownership cost include?

   • Only purchase price
   • Purchase price
   • depreciation
   • insurance
   • operating costs
   • Only maintenance costs

   Hint

   Think about all the responsibilities of ownership.

4. 4.

   True or False: Depreciation increases the value of an asset over time.

   • True
   • False

   Hint

   Consider how assets typically age.

5. 5.

   A construction company has a dump truck purchased for ₹4,00,00,000, with a useful life of 15 years and a salvage value of 20%. What will be the annual depreciation using the straight-line method?

   Hint

   Calculate the salvage value first!

6. 6.

   Estimate the total ownership cost of an excavator purchased for ₹5,00,00,000, expected to operate 2000 hours yearly and subject to depreciation, insurance 2%, interest 6%, and operational costs attached. Calculate each component.

   Hint

   Break down each component calculation before summing.