2.1 - Equivalent Uniform Annual Cost of Salvage Value
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Practice Questions
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What is Equivalent Annual Cost?
💡 Hint: Think about how costs spread over time.
Define salvage value.
💡 Hint: Consider what an asset could be worth eventually.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does EAC stand for?
💡 Hint: Remember the context of annualizing costs.
True or False: Salvage value is what an asset is worth at the end of its useful life.
💡 Hint: Think about what happens at the end of asset service.
2 more questions available
Challenge Problems
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A piece of construction equipment costs ₹30,00,000 and has a salvage value of ₹5,00,000 after 10 years. If the interest rate is 9%, calculate the hourly depreciation assuming 1500 hours of operation per year.
💡 Hint: Don’t forget to simplify after calculating EACs!
An asset with an initial cost of ₹20,00,000 will depreciate to a 10% salvage value in 8 years at an interest rate of 7%. Calculate the equivalent annual cost of the asset.
💡 Hint: Use the EAC formulas step by step!
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