Podcast
Questions and Answers
When evaluating different-life alternatives, what are the assumptions of the LCM approach?
When evaluating different-life alternatives, what are the assumptions of the LCM approach?
- Service provided is needed over the LCM or more years, and cash flow estimates are the same for each life cycle (correct)
- Service provided is needed over the LCM or more years, and selected alternative can be repeated over each life cycle of LCM in exactly the same manner
- Cash flow estimates are the same for each life cycle, and selected alternative can be repeated over each life cycle of LCM in exactly the same manner
- Service provided is needed over the LCM or more years, and short study periods are often defined by management when business goals are short-term
In the context of evaluating different-life alternatives, what is the purpose of using a study period?
In the context of evaluating different-life alternatives, what is the purpose of using a study period?
- To select the alternative with the highest present worth value
- To compare alternatives for equal service
- To specify a time frame for ignoring all cash flows after this time (correct)
- To identify the alternative with the lowest annual cost
What is the purpose of using present worth analysis with a specified study period?
What is the purpose of using present worth analysis with a specified study period?
- To find the future worth of different-life alternatives
- To identify the alternative with the lowest annual cost
- To select the alternative with the highest present worth value (correct)
- To compare alternatives for equal service
What should be disregarded in present worth evaluation when using a study period?
What should be disregarded in present worth evaluation when using a study period?
When comparing machines using present worth analysis at a specified interest rate, which factor determines whether to repurchase a machine after a certain number of years?
When comparing machines using present worth analysis at a specified interest rate, which factor determines whether to repurchase a machine after a certain number of years?
When formulating alternatives, what is the difference between mutually exclusive and independent projects?
When formulating alternatives, what is the difference between mutually exclusive and independent projects?
In cash flow estimates, what is the main difference between Revenue and Cost alternatives?
In cash flow estimates, what is the main difference between Revenue and Cost alternatives?
What does PW Analysis of Alternatives involve?
What does PW Analysis of Alternatives involve?
In the evaluation of alternatives using PW, what does a PW of 0 indicate for one project?
In the evaluation of alternatives using PW, what does a PW of 0 indicate for one project?
For mutually exclusive alternatives, how should the selection be made based on PW analysis?
For mutually exclusive alternatives, how should the selection be made based on PW analysis?
