Practice Equivalent Annual Cost Calculation for Challenger - 5 | 21. Introduction to Defender and Challenger Equipment | Construction Engineering & Management - Vol 1
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5 - Equivalent Annual Cost Calculation for Challenger

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

Calculate the annual operating cost for the defender if the annual maintenance is 1,35,000.

💡 Hint: What is the given operating cost?

Question 2

Easy

What does salvage value represent?

💡 Hint: Think about the end of an asset's life.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the primary focus of the equivalent annual cost method?

  • To maximize salvage value
  • To find annual costs to compare equipment
  • To minimize initial costs

💡 Hint: Think about why we calculate annual costs.

Question 2

True or False: Sunk costs should influence current decision-making.

  • True
  • False

💡 Hint: Consider the definition of sunk costs.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

Assume the defender has an updated annual operating cost of 1,50,000 and a salvage value of 5,00,000. Recalculate the EAC and determine if it should still be replaced by the challenger.

💡 Hint: Use the formula and adjust for new operating costs.

Question 2

If the interest rate changes to 12% and the initial cost of the challenger is 30,00,000, how would this affect the EAC? Recalculate.

💡 Hint: Apply the new interest rate to find the new USCRF.

Challenge and get performance evaluation