1. Introduction to Defender and Challenger Equipment

Try these first

1. 1.

   What is the annual operating cost of the defender equipment?

   Hint

   Look in the section where operating costs are mentioned.

2. 2.

   Define 'sunk cost' in the context of equipment analysis.

   Hint

   Think about costs already incurred.

3. 3.

   What annual operating cost does the defender have?

   • ₹90,000
   • ₹1,35,000
   • ₹6,00,000

   Hint

   Check the section discussing operational expenses.

4. 4.

   True or False: Sunk costs should heavily influence equipment replacement decisions.

   • True
   • False

   Hint

   Recall the definitions discussed in class.

5. 5.

   Given the current market conditions raise the salvage value of the challenger to ₹14,00,000 after five years, re-evaluate the financial benefits of replacing the defender.

   Hint

   Think of how an increased salvage value changes overall cost calculations.