5 - Operating Cost Estimation
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Practice Questions
Test your understanding with targeted questions
What is the formula for calculating Equivalent Annual Cost (EAC)?
💡 Hint: Remember the components of the formula.
Define Salvage Value.
💡 Hint: Think about asset depreciation.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What does EAC stand for?
💡 Hint: Think about investment recovery.
True or False: Salvage value is always a fixed amount and does not change over the asset's life.
💡 Hint: Consider how wear and tear affect assets.
1 more question available
Challenge Problems
Push your limits with advanced challenges
Calculate the total operating cost for a machinery project with an initial cost of ₹1,500,000, a salvage value of 10%, annual usage of 1,800 hours, and operational costs as outlined in the example.
💡 Hint: Break the problem into parts: find EAC, calculate operating costs, and sum them up.
Imagine a company has machinery with an initial investment of ₹2,500,000 and annual usage of 2,400 hours. If they also incur repair costs of ₹2,000 per month and insurance of 5% of initial cost annually, find the total operating cost.
💡 Hint: Estimate repair costs per year and include in total operating costs.
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