The Equivalent Annual Cost Method Is Useful in Determining

question 154

Multiple Choice

The equivalent annual cost method is useful in determining:

• A) The annual operating cost of a machine if the annual maintenance is performed versus when the maintenance is not performed as recommended.
• B) The tax shield benefits of depreciation given the purchase of new assets for a project.
• C) Operating cash flows for cost-cutting projects of equal duration.
• D) Which one of two machines to acquire given equal machine lives but unequal machine costs.
• E) Which one of two machines to purchase when the machines are mutually exclusive, have different machine lives, and will be replaced once they are worn out.

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