The Following Information Is for Four Highway Programs of Increasing

question 26

Multiple Choice

The following information is for four highway programs of increasing scope.All figures are in millions of dollars.The data indicate that:

• A) there is no highway program which is economically justifiable on the basis of cost-benefit analysis.
• B) the marginal cost and marginal benefit of Program A are $2 and $9 respectively.
• C) the marginal cost and marginal benefit of Program C are $12 and $21 respectively.
• D) the marginal cost and marginal benefit of Program A cannot be determined.

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Definitions:

Economic Life

The estimated period over which an asset is expected to be economically useful to the owner.

Sales-Type Lease

A lease agreement where the lessor recognizes profit or loss upfront due to the difference between the fair value of the asset and its carrying amount.

Initial Direct Costs

Expenses directly associated with obtaining or originating a financing lease, which are often deferred and amortized over the lease term.