2. Salvage Value Analysis

Try these first

1. 1.

   What is the salvage value?

   Hint

   Think about what residual value a machine might have.

2. 2.

   Define Equivalent Uniform Annual Cost.

   Hint

   Remember, it makes long-term cost analysis simpler.

3. 3.

   What represents the salvage value of equipment?

   • Initial cost
   • Future resale value
   • Annual depreciation

   Hint

   It's the leftover value post-use.

4. 4.

   True or False: Annualizing costs assists in more accurate budgeting over time.

   • True
   • False

   Hint

   Think about budgeting across multiple years.

5. 5.

   Given an initial cost of ₹5,00,00,000, a salvage value of ₹1,00,00,000, and an operational life of 10 years, compute the overall hourly depreciation if the equipment operates for 2000 hours annually.

   Hint

   Calculate the annual depreciation first.

6. 6.

   Estimate the total hourly cost of an equipment that includes ownership costs of ₹4000/hr, operating costs of ₹2000/hr and an operator's wage of ₹300/hr.

   Hint

   Add all components for the final figure.