Practice Recap Of Previous Lecture (1.2) - Equipment Life and Replacement Analysis (Part 3)

Practice: Recap of Previous Lecture

Lesson 1.2Equipment Life and Replacement Analysis (Part 3)

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9 questions

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3 cards from this section. Quick, good the night before a test.
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6 questions · about 4 min · pass mark 70%. Hints available.
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3 questions · about 2 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
What is replacement analysis?
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Think about cost versus profits.
Question 2.
What is the importance of market value in replacement analysis?
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Consider the third-party perspective.
3Question 3.
What does replacement analysis aim to achieve?
- Maximize sales
- Minimize costs
- Both A and B
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Focus on the main goal of the analysis.
4Question 4.
True or False: The initial purchase price is crucial when considering the replacement of equipment from a third-party perspective.
- True
- False
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Think about a third-party's concern.
Question 5.
A construction company has a bulldozer with a current market value of $25,000 and an estimated operating cost increase of $5,000 per year after 3 years. Calculate its economic life considering a new bulldozer costs $50,000 with an operating cost of $2,000 per year.
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Break down costs year by year.
Question 6.
Given that a machine has depreciated to $15,000, calculate the implications of its book value (of $10,000) versus its current market value if operational costs rise significantly. When should it be replaced?
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Focus on the break-even point for operational costs.

5 more questions in this section. Enroll free to practise them all.