Practice Equivalent Uniform Annual Cost Of Salvage Value (2.1) - Initial Cost Analysis

Practice: Equivalent Uniform Annual Cost of Salvage Value

Lesson 2.1Initial Cost Analysis

Practise this section

10 questions

Flashcard drill
4 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 is Equivalent Annual Cost?
Show hintHide hint
Think about how costs spread over time.
Question 2.
Define salvage value.
Show hintHide hint
Consider what an asset could be worth eventually.
3Question 3.
What does EAC stand for?
- Equivalent Annual Cost
- Estimated Annual Cost
- Endless Annual Cost
Show hintHide hint
Remember the context of annualizing costs.
4Question 4.
True or False: Salvage value is what an asset is worth at the end of its useful life.
- True
- False
Show hintHide hint
Think about what happens at the end of asset service.
Question 5.
A piece of construction equipment costs ₹30,00,000 and has a salvage value of ₹5,00,000 after 10 years. If the interest rate is 9%, calculate the hourly depreciation assuming 1500 hours of operation per year.
Show hintHide hint
Don’t forget to simplify after calculating EACs!
Question 6.
An asset with an initial cost of ₹20,00,000 will depreciate to a 10% salvage value in 8 years at an interest rate of 7%. Calculate the equivalent annual cost of the asset.
Show hintHide hint
Use the EAC formulas step by step!

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