Use the Information Below to Answer the Following Question(s)

question 34

Multiple Choice

Use the information below to answer the following question(s) .Jupiter Ltd.wants to automate one of its production processes.The new equipment will cost $90,000.In addition, Jupiter will incur installation and testing costs of $5,000 and $4,500 respectively.The expected life of the equipment is 5 years and the salvage value of the equipment is estimated at $12,000.The annual cash savings are estimated at $29,000.The company uses straight-line depreciation and has a required rate of return of 9%.Ignore income taxes.
-Which of the following is TRUE concerning capital budgeting analysis?

• A)The IRR and AARR consider the time value of money.
• B)The payback method and the AARR both consider profitability.
• C)NPV and IRR consider accruals.
• D)The payback method and the AARR both consider profitability, and NPV and IRR do not consider accruals.
• E)NPV and IRR do not consider accruals, and the IRR considers the time value, but AARR does not.

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Definitions:

Usable Energy

Energy in a form that can be directly applied to perform work or be processed into a form suitable for human needs, such as electricity or mechanical power.

Energy Transformation

The process of converting energy from one form to another, such as kinetic energy to electrical energy, fundamental to various natural phenomena and technologies.

Low-Quality Heat

Thermal energy that is at a temperature unsuitable or inefficient for conversion into work or other high-value energy forms.

Physical Laws

Fundamental principles that describe and predict the conditions under which physical events occur, usually expressed in mathematical form.