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3 cards from this section. Quick, good the night before a test.
What are the components of ownership costs?
Think about what costs you would incur beyond just buying a piece of equipment.
How is depreciation calculated?
Remember the equation you learned — Initial Cost minus Salvage Value.
What does ownership cost include?
Think about all costs associated with owning and running equipment.
Is depreciation considered in operating cost calculations?
Remember the definitions we discussed earlier.
Calculate the total cost for a piece of equipment with a purchase price of 500,000, having operating costs of 60 per hour, expected to be used for 2,000 hours annually over 10 years, with a salvage value at 20%.
Start by determining annual depreciation before summing it up with operating costs.
Apply both Caterpillar and Peurifoy methods on a dump truck with a purchase price of 3 crores. Discuss key differences in estimates produced.
Understand how each method approaches the timing of cash flows and expenses.
6 more questions in this section. Enroll free to practise them all.
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