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Practice Questions
Test your understanding with targeted questions related to the topic.
Question 1
Easy
What is the purpose of calculating Equivalent Annual Cost (EAC)?
💡 Hint: Think about why we want to express costs on a regular basis.
Question 2
Easy
What should you neglect in a replacement analysis?
💡 Hint: What costs cannot be recovered?
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 does EAC stand for?
- Equivalent Annual Cost
- Estimated Annual Charge
- Emergency Allocation Cost
💡 Hint: Think about terms used in financial analysis.
Question 2
True or False: Sunk costs should be included in the decision-making process for equipment replacement.
- True
- False
💡 Hint: Consider what makes a cost relevant for decision-making.
Solve and get performance evaluation
Challenge Problems
Push your limits with challenges.
Question 1
Given the defender's initial cost of 2,250,000, operating cost of 135,000, and salvage value of 6,00,000, calculate the EAC.
💡 Hint: Break down the formula into manageable components.
Question 2
Analyze how a change in the salvage value of the defender to 8,00,000 affects the EAC calculation.
💡 Hint: Think about how increases in incoming cash affect your total costs.
Challenge and get performance evaluation