Practice Calculation Of Operating And Maintenance Costs (3.3) - Introduction to Defender and Challenger Equipment

Practice: Calculation of Operating and Maintenance Costs

Lesson 3.3Introduction to Defender and Challenger Equipment

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10 questions

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4 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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Quiz
4 questions · about 3 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
What is considered an operating cost?
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Think about daily running costs.
Question 2.
What does salvage value represent?
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It's like the final price when selling something used.
3Question 3.
What is the annual operating cost of the challenger?
- 90,000
- 135,000
- 100,000
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Look back to the initial costs mentioned.
4Question 4.
Is the defender's initial cost relevant in the replacement analysis?
- True
- False
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Consider which costs are current versus past.
Question 5.
A piece of machinery has a purchase price of 50,000 with an annual operating cost of 10,000 and salvage value of 5,000 after 4 years. If the interest rate is 6%, compute the EAC.
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Use formulas for Pv and annualize them.
Question 6.
Scenario: Two machines have the following details: Machine A costs 25,000, with operating costs of 3,000, salvage at 2,000 over 5 years; Machine B costs 20,000, with 2,500 operating and 1,500 salvage value. Which machine is preferable and why, based on EAC?
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Focus on annualizing those costs.

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