The Equivalent Annual Cost Method Is Most Useful in Determining

question 6

Multiple Choice

The equivalent annual cost method is most useful in determining:

• A)the annual operating cost of an idle machine that is currently owned by a firm.
• 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 differing lives,and will be replaced.

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