CFM Exam Dumps | What is considered the point in an asset's life cycle where the total ownership costs are at the lowest?

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Question 8/86

What is considered the point in an asset's life cycle where the total ownership costs are at the lowest?

A. Ownership life

B. Useful life

C. End of life

D. Economic life

Correct Answer: D

Theeconomic lifeof an asset is the period during which it remains cost-effective to operate and maintain, minimizing total ownership costs.
* Economic life (D)is determined by evaluating operating expenses, maintenance costs, depreciation, and efficiency. At this stage, the asset providesmaximum value before its costs exceed its benefits.
* Ownership life (A)refers to the entire period of possession, which may extend beyond itsoptimal cost- effective period.
* Useful life (B)is the estimated time an asset can be functionally used, but this does not always align with cost efficiency.
* End of life (C)marks when an asset is no longer usable, often requiring costly disposal or replacement.

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