QUESTION 2 1 points When considering 3 or more mutually exclusive alternatives,
ID: 2441051 • Letter: Q
Question
QUESTION 2 1 points When considering 3 or more mutually exclusive alternatives, how should the alternatives be ranked before performing incremental analysis? a. From lowest initial cost to highest initial cost O b. From highest initial cost to lowest initial cost C. From highest EUAC to lowest EUAC d. From lowest EUAC to highest EUAC QUESTION 3 1 points Based on the table, what is the EUAC for Investment A when i-15%? Investment A Investment B 12,000 $900 2,500 $9,000 300 $1,200 Purchase price Annual maintenance Salvage Useful life (years a. $2541 b. S3785 C. $3896 d. $5436 QUESTION 4 1 points Based on the table, what is the EUAC for Investment B when i-15%? Purchase price Annual maintenance Salvage Useful life (years a. $2541 Investment A Investment B 12,000 $900 $2,500 $9,000 300 $1,200 o b. $3785 OC. S3896 d. $5436Explanation / Answer
(Question 2) Option (a)
(Question 3) Option (c)
EUAC, Investment A ($) = 9,000 x A/P(15%, 3) + 300 - 1,200 x PVIF(15%, 3) x A/P(15%, 3)
= 9,000 x 0.438** + 300 - 1,200 x 0.6575** x 0.438**
= 3,942 + 300 - 346
= 3,896
(Question 4) Option (b)
EUAC, Investment B ($) = 12,000 x A/P(15%, 6) + 900 - 2,500 x P/F(15%, 6) x A/P(15%, 6)
= 12,000 x 0.2642** + 900 - 2,500 x 0.4323** x 0.2642**
= 3,170 + 900 - 286
= 3,784 (Slight difference due to rounding off)