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2 cards from this section. Quick, good the night before a test.
Define ownership costs in your own words.
Think about different kinds of expenditures involved.
What are investment costs?
Consider both the purchase and other potential returns.
What is included in ownership costs?
Think about all the costs included in owning machinery.
True or False: Depreciation represents the increase in the asset's value over time.
Recall what happens to the value of machines over use.
You acquire a machine for $100,000, with a salvage value of $10,000 over 8 years. Calculate the average annual investment cost and explain the components.
Remember to include the salvage value in your calculations.
If a machine incurs storage costs of 1% of its value at $50,000, what are the annual storage costs, and how would you apply this to ownership calculations?
Use percentage formulas to find the annual storage cost.
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