For Comparison Purposes, in Order to Evaluate Alternatives with Unequal

question 23

Multiple Choice

For comparison purposes, in order to evaluate alternatives with unequal lives one should

• A)repeat service life of each alternative at least three times.
• B)assume some certain study period for evaluation by introducing salvage values for each alternative.
• C)assume that the service life of each project is indefinite.
• D)apply only annual worth comparison method for each alternative.
• E)apply only present worth comparison method for each alternative.

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Definitions:

Earnings per Share

A company's net profit divided by its number of outstanding shares, indicating how much money each share makes in net income.

Annual Dividend

The total amount of dividends paid to shareholders over a year.

Share

A unit of ownership in a company or financial asset that represents a proportionate claim on its assets and earnings.

Partial Excludability

Characteristic of a good whereby it is difficult but not impossible to prevent people from using it, often seen in semi-public goods.