In a Decision to Keep or Replace Existing Equipment, ________

question 32

Multiple Choice

In a decision to keep or replace existing equipment, ________ is a FALSE statement.

• A)the book value of the old equipment is irrelevant
• B)the disposal value of the old equipment is irrelevant
• C)the cost of the new equipment is relevant
• D)depreciation on the new equipment is relevant

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Definitions:

Disbursements

Payments made by a business, usually consisting of expenses, investments, and other financial outlays.

Lower Cash Balance Limit

The minimum amount of cash that a business aims to maintain in its cash reserves to meet emergency or operational needs.

Miller-Orr Model

The Miller-Orr Model is a financial model used to manage cash flow and determine the optimal balance between holding cash versus short-term investments.

Disbursements

Payments made by a business, often related to operational expenses or loan repayments.