1.1 - Equivalent Uniform Annual Cost of Initial Cost
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Practice Questions
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What is the formula for calculating Equivalent Uniform Annual Cost (EUAC)?
💡 Hint: Remember EUAC includes initial cost and time value of money.
Define 'Salvage Value'.
💡 Hint: Think about what happens to the equipment at the end.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does EUAC stand for?
💡 Hint: Think about financial metrics in project management.
Is the salvage value an important factor in calculating total asset costs?
💡 Hint: Consider the future resale value.
3 more questions available
Challenge Problems
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A construction firm purchases a new concrete mixer for ₹ 15,00,000. If the equipment depreciates regularly at a rate ensuring a salvage value of ₹ 3,00,000 over a useful life of 8 years, calculate its EUAC using an interest rate of 7%. Provide full computations.
💡 Hint: Remember to factor in both depreciation and the salvage value.
An equipment rental business estimates an initial cost of ₹ 25,00,000 for a truck that will cost about ₹ 55,000 annually to operate. Given an anticipated salvage value of ₹ 2,50,000 after 10 years, compute both the ownership and operating costs in a 10-year framework; discuss the analysis findings.
💡 Hint: Look closer at how recurring costs align against initial investment for overall analysis.
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