Practice - Equipment Ownership Cost Estimation Approaches
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Practice Questions
Test your understanding with targeted questions
What are owning costs?
💡 Hint: Think about the long-term costs that do not change with usage.
What is operating cost?
💡 Hint: Consider costs that fluctuate based on equipment usage.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What does Owning Cost typically include?
💡 Hint: Think about costs that accrue regardless of usage.
True or False: The Average Annual Investment Method accounts for the time value of cash flows.
💡 Hint: Focus on what the method implies about cost estimation.
1 more question available
Challenge Problems
Push your limits with advanced challenges
A construction project requires a bulldozer. Its initial purchase cost is $100,000, with an expected life of 10 years and an estimated yearly operational cost of $15,000. Calculate the Average Annual Investment.
💡 Hint: Add both parts together before dividing by the lifespan.
If a company anticipates cash inflows from machinery depreciation over time and expects a future cash flow of $30,000 in 5 years, calculate its present value using a discount rate of 5%.
💡 Hint: Be sure to factor in the interest rate when discounting.
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