Practice Salvage Value And Life Of Challenger (1.2) - Introduction to Defender and Challenger Equipment

Practice: Salvage Value and Life of Challenger

Lesson 1.2Introduction to Defender and Challenger Equipment

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10 questions

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6 sample questions

Question 1.
What is the operating cost of the challenger?
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Check the section where costs are mentioned.
Question 2.
What does salvage value mean?
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Think about the end value of the equipment.
3Question 3.
What is the operating cost of the challenger?
- ₹90,000
- ₹1,35,000
- ₹12,00,000
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Consider the annual costs mentioned earlier.
4Question 4.
Is the salvage value of the defender higher than that of the challenger?
- True
- False
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Review the numbers for both machines.
Question 5.
A construction company is evaluating two machines—Defender and Challenger. If Defender has an initial cost of ₹35,00,000 and an operating cost of ₹1,35,000 with a salvage value of ₹6,00,000, while Challenger has an initial cost of ₹27,50,000 and an operating cost of ₹90,000 with a salvage value of ₹12,00,000, what should the company conclude based on EAC after 5 years?
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Evaluate both cash outflows and inflows to get the annualized costs.
Question 6.
Given that the investment cost is at 10%, if a company considers replacing a machine with a higher salvage value and lower operating costs, how might this decision change over time if market conditions affect salvage values?
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Consider how external factors can shift financial decisions over time.

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