7.1. Summary of Key Learnings

Try these first

1. 1.

   What is the initial cost in the example discussed?

   Hint

   Look for the number mentioned as initial expenses.

2. 2.

   Calculate the salvage value if it's set at 20% of the initial cost.

   Hint

   Multiply the initial cost by 0.2.

3. 3.

   What is the uniform series capital recovery factor used for?

   • To calculate annual costs
   • To find salvage values
   • To estimate insurance costs

   Hint

   Think about how recurring costs are derived from initial costs.

4. 4.

   True or False: The salvage value is always considered in the total cost of ownership.

   • True
   • False

   Hint

   Reflect on the equipment’s value at the end of its lifecycle.

5. 5.

   You have a piece of equipment costing ₹5,00,00,000, depreciating at 10% per year. What would its hourly depreciation cost be for a usage of 2000 hours annually, accounting for a salvage value of ₹50,00,000?

   Hint

   Use the formula to determine depreciation to subtract salvage from the initial cost.

6. 6.

   If fuel is priced at ₹80 per liter and a machine consumes 0.12 liters per horse power per hour for a 350 HP engine, what would the hourly fuel cost be?

   Hint

   Multiply consumption after determining the machine's power.