A Major Problem in a Plant Location Decision Based on the Factor-Rating

question 41

True/False

A major problem in a plant location decision based on the factor-rating system is that simple point-rating schemes do not account for the wide variance of costs that may occur within each factor used in the analysis.

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Definitions:

EAR

Effective Annual Rate, a measure of interest that takes into account the effect of compounding over a year.

Compounded Quarterly

The process whereby the interest earned on an investment is calculated and added to the principal sum every three months, then the new total is used for the next compounding period.

Compounded Annually

The process where the interest earned in one period is added to the principal, and then interest in the next period is calculated on the new total.

Annual Payments

Regular payments made once a year, often related to loans, annuities, or other financial instruments.