Practice Calculating Equivalent Annual Cost For Year 3 Of O&m Cost (1.7) - Equivalent Annual Cost Calculation

Practice: Calculating Equivalent Annual Cost for Year 3 of O&M Cost

Lesson 1.7Equivalent Annual Cost Calculation

Practise this section

10 questions

Flashcard drill
3 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
Sign up to start the exercise
Quiz
4 questions · about 3 min · pass mark 70%. Hints available.
Sign up to start the quiz

6 sample questions

Question 1.
What does EAC stand for?
Show hintHide hint
Look for the acronym meaning in basic definitions.
Question 2.
What is the first step to calculate the EAC from the purchase price?
Show hintHide hint
The acronym helps remember the two components needed for this calculation.
3Question 3.
What does EAC stand for?
- Earning Annual Cost
- Equivalent Annual Cost
- Equalized Annual Cost
Show hintHide hint
Focus on the 'A' in EAC for annual.
4Question 4.
Is the USCRF constant across different years?
- True
- False
Show hintHide hint
Remember how interest impacts future value.
Question 5.
A company has purchased equipment for 5,000,000 with a USCRF of 0.25. If the total O&M costs yearly are 500,000 but increase 5% each year, calculate the EAC after three years.
Show hintHide hint
Factor each year’s increase into the calculations.
Question 6.
If a piece of machinery is expected to last for 10 years with an initial purchase of 20,000,000 and a salvage value of 2,000,000 after that time, estimate the EAC using a 10% interest rate.
Show hintHide hint
Considering salvage values is crucial for accurate costing.

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