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Test your understanding with targeted questions related to the topic.
Question 1
Easy
What is the annual operating cost of the defender?
💡 Hint: Look for the information given about the defender's costs.
Question 2
Easy
What should you avoid considering in replacement analysis?
💡 Hint: Think about costs that are already spent.
Practice 4 more questions and get performance evaluation
Engage in quick quizzes to reinforce what you've learned and check your comprehension.
Question 1
What is the annual operating cost of the challenger?
💡 Hint: Refer back to the operating cost specifics mentioned.
Question 2
True or False: The salvage value of the defender is higher than the challenger.
💡 Hint: Recall the values given for both the equipment.
Solve and get performance evaluation
Push your limits with challenges.
Question 1
You are tasked with suggesting whether to replace the defender with the challenger or not. Calculate the long-term cost implications if the cash flows appear over a period of 5 years, considering the given values.
💡 Hint: Use the given formulas for EAC and ensure you include all components in your analysis.
Question 2
If the annual operating cost of the defender increases by 10% over the next year, what should the revised recommendation be?
💡 Hint: Calculate the increased operating cost and compare with the challenger. Include the effects of compounding over the 5 years.
Challenge and get performance evaluation