7.3 - Next Lecture Preview
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Practice Questions
Test your understanding with targeted questions
What is the definition of a defender in terms of replacement analysis?
💡 Hint: Recall which term refers to your existing machinery.
Explain what a sunk cost is.
💡 Hint: Think about old expenses and decision making.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What is considered when doing a replacement analysis?
💡 Hint: Focus on what matters for today, not yesterday.
Is it acceptable to include sunk costs in replacement analysis?
💡 Hint: Think about costs you cannot recover.
1 more question available
Challenge Problems
Push your limits with advanced challenges
A company has a defender with an annual operating cost of 1,35,000 and a remaining life of 5 years. It can be sold for 6,00,000. If a challenger has an operating cost of 90,000 and costs 27,50,000, calculate the equivalent annual costs and recommend a course of action.
💡 Hint: Remember to apply the right formulas for CRF and SFF in your calculations.
Discuss a situation where retaining a defender might be favorable despite its costs, ensuring to quantify potential benefits.
💡 Hint: Explore qualitative benefits that factor into decision-making.
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