Practice Calculating Other Components of Ownership Cost - 4.7 | 9. Uniform Series Capital Recovery Factor | Construction Engineering & Management - Vol 1
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4.7 - Calculating Other Components of Ownership Cost

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the Capital Recovery Factor used for?

💡 Hint: Think about cash flows and repayment schedules.

Question 2

Easy

Define the term 'Ownership Cost.'

💡 Hint: Consider all costs related to asset ownership.

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 is the primary purpose of the Capital Recovery Factor?

  • To find present worth
  • To determine loan repayments
  • To calculate future value

💡 Hint: Think about how loans are repaid over time.

Question 2

True or False: Ownership Cost includes only the purchase price of the equipment.

  • True
  • False

💡 Hint: Consider maintenance, taxes, and other operational costs.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A business owner plans to purchase a new machine for $250,000, which will last for 8 years. If the company expects to recover its investment with a yearly income of $50,000, what should be the required annual price considering a 10% interest rate?

💡 Hint: Make sure you incorporate the time value of money in your calculations.

Question 2

If a piece of equipment has an estimated operation cost of $15,000 per year and you expect its residual value will be $20,000 at the end of its useful life of 5 years, calculate the total ownership cost.

💡 Hint: Don’t forget to include salvage values when calculating total ownership.

Challenge and get performance evaluation