Two Mutually Exclusive Projects with the Same Service Lives of 2

question 45

Multiple Choice

Two mutually exclusive projects with the same service lives of 2 years are characterized by first costs of $100 million and $120 million respectively and annual savings of $60 million and $70 million respectively. If the MARR is 10%, which one should be chosen on the basis of the present worth comparison method?

• A)The second one because it has higher annual savings.
• B)The first one because its present worth is higher.
• C)The second one because its present worth is higher.
• D)The first one because incremental present worth is positive.
• E)Neither because both produce negative present worth.

Understand the difference between one-tailed and two-tailed tests.

Know the procedures and tests for comparing means and proportions across independent and paired samples.

Understand how to record cash dividends received from an investment using the equity method.

Comprehend the accounting for debt securities, including purchase, interest revenue calculation, and maturity.

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Definitions:

Mature

A term describing an organism, individual, or system that has reached a fully developed or final stage in its growth or development.

Bystander Effect

The phenomenon where individuals are less likely to offer help to a victim when other people are present, often due to a diffusion of responsibility.

Mere Exposure Effect

A mental effect where individuals grow fond of something simply due to their familiarity with it.

Social Traps

Situations where a group or individual acts in a way that seems beneficial in the short term but leads to negative outcomes in the long term for everyone involved.