4.1. Insurance Cost Calculation

Try these first

1. 1.

   What is the formula for calculating the annualized initial cost?

   Hint

   Think of the components: initial cost, interest, and lifespan.

2. 2.

   How do you calculate the insurance cost if it's 2% of an initial cost of ₹2,89,00,000?

   Hint

   It's simply finding 2% of the total cost.

3. 3.

   What is the formula used to calculate the annualized cost of machinery?

   • Annualized Cost = (Initial Cost × i) / (1 + i)^n
   • Annualized Cost = (Initial Cost × i(1+i)^n) / ((1+i)^n - 1)
   • Annualized Cost = Initial Cost / lifespan

   Hint

   Focus on how interest and lifespan influence costs.

4. 4.

   True or False: The salvage value is accounted for in the total ownership cost calculation.

   • True
   • False

   Hint

   Consider how salvage value impacts expenses.

5. 5.

   You have a machine with an initial cost of ₹2,89,00,000, interest rate of 8%, and a salvage value of 20%. Calculate both the annualized initial cost and the annualized salvage value.

   Hint

   Use the relevant formulas for annualized costs.

6. 6.

   If you know that the total ownership cost equals ₹5759.2 per hour and it includes operator wages of ₹200, what are the total operating costs excluding the operator?

   Hint

   Subtract operator costs from the total to find operational expenses.