Practice Sunk Cost Explanation - 2.3 | 21. Introduction to Defender and Challenger Equipment | Construction Engineering & Management - Vol 1
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Knowledge

2.3 - Sunk Cost Explanation

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

Define sunk cost in your own words.

💡 Hint: Think about how past investments affect current choices!

Question 2

Easy

What is the current operating cost of the challenger?

💡 Hint: Refer back to the discussion on operating and maintenance costs.

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 defines a sunk cost?

  • A cost that can be recovered
  • A cost that has already been incurred and cannot be recovered
  • A projected future cost

💡 Hint: Remember the definition we discussed in class.

Question 2

True or False: Salvage value of equipment should be considered in replacement analysis.

  • True
  • False

💡 Hint: Think about how salvage value impacts overall costs.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company has incurred a cost of 5,00,000 on their current equipment, and its current salvage value is 3,00,000. Explain whether they should consider this cost in a decision about replacing this equipment with a new one costing 4,00,000 with a projected salvage value of 1,00,000.

💡 Hint: Consider how ignoring past costs could lead to better decision-making.

Question 2

Given the defender and challenger, if the annual operating costs are reduced by 50% with the challenger, calculate the savings over 5 years, ignoring any sunk costs.

💡 Hint: Calculate the difference first, then multiply by the number of years.

Challenge and get performance evaluation