Practice Summary of Defender's Equivalent Annual Cost - 4 | 21. Introduction to Defender and Challenger Equipment | Construction Engineering & Management - Vol 1
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Knowledge

4 - Summary of Defender's Equivalent Annual Cost

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

Define defender in the context of equipment analysis.

💡 Hint: Think about what equipment you are using presently.

Question 2

Easy

What does EAC stand for?

💡 Hint: It is a term that helps compare costs over time.

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 'defender' refer to in equipment analysis?

  • Current equipment
  • Proposed equipment
  • Sunk costs

💡 Hint: Think about which equipment you have now.

Question 2

True or False: Sunk costs should be included in the analysis for replacing equipment.

  • True
  • False

💡 Hint: Consider if an expense you've incurred matters for decisions ahead.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company has a defender with an initial cost of 20,00,000, annual operating costs of 1,00,000, and a salvage value of 5,00,000 after 8 years. They are considering a challenger with an initial cost of 25,00,000 with a 6,00,000 salvage value and operating costs of 80,000 annually. Calculate the equivalent annual cost for both and determine which is preferable.

💡 Hint: Use the uniform series factors for both EAC calculations based on time and costs.

Question 2

Determine the financial impacts if the defender's salvage value unexpectedly decreases to 3,00,000. Would this affect the decision to keep it or switch to the challenger?

💡 Hint: Look closely at how the changes to salvage affect the bottom line.

Challenge and get performance evaluation