Assume in Analyzing Alternative Proposals That Proposal F Has a Useful

question 110

Multiple Choice

Assume in analyzing alternative proposals that Proposal F has a useful life of 6 years and Proposal J has a useful life of 9 years. What is one widely used method to make the net present values of the proposals comparable?

• A)Ignore the fact that Proposal F has a useful life of 6 years and treat it as if it has a useful life of 9 years.
• B)Adjust the life of Proposal J to a time period that is equal to that of Proposal F by estimating a residual value at the end of year 6.
• C)Ignore the useful lives of 6 and 9 years and find an average (7 1/2 years).
• D)Ignore the useful lives of 6 and 9 years and compute the average rate of return.

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Definitions:

Cash Payments Journal

This is a special journal used in accounting to record all cash outflows or payments made by the business, including expenses, creditor payments, and cash purchases.

Payment Salaries

The process of disbursing funds to employees as compensation for their work over a certain period.

Special Journal

A designated financial journal in accounting that records specific types of transactions, such as sales or purchases, to simplify and streamline accounting processes.

Customer Balances

The amounts owed by customers to a business for goods or services provided on credit.