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Equipment and Estimation - Lesson Summary

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Equipment and Estimation - Lesson Summary
To be economically competitive, the contractor’s equipment must be competitive both mechanically and technologically.Old machines that require costly repairs cannot compete successfully with the lower repair costs higher production rates that one can realise with new equipment.The switching between the different depreciation methods is done in order to accelerate the depreciation of the book value of assets in order to get income tax benefits.Depreciation refers to the loss of value of the equipment between the time it is purchased and the time it is replaced.Economic equivalence refers to a combination of interest and the time value of money that is used to determine the different amounts of money at different time periods which are equal in economic value.The annual cost of maintenance and repair maybe expressed as a percentage of the annual cost of depreciation.The time value of money is the difference between the money borrowed for use today and the returned amount at a future date.The expected salvage value that occurs at the end of the life of a machine can be converted into equivalent uniform annual amounts using the USSFF.