A company who manufactures barrels for wine storage was choosing between two steam machines that bends oak wood into a barrel shape. One of the managers insisted on including the original cost of the existing machine in the decision analysis. If you were the other manager, you would:

a.Accept this suggestion.

b.Accept this suggestion but only account for half the price of the existing machine.

c.Reject the suggestion since it would be hard to know the current market value of the existing machine.

d.Reject the suggestion because it is a sunk cost not relevant in the decision process.

Under annual cash flow analysis, if projects A and B are of unequal lives but are for a continuing requirement with identical replacement after their respective useful lives, the analysis period is

a.the maximum life of the alternatives.

b.the minimum life of the alternatives.

c.always the common project life.

d.the respective life of each alternative.

In engineering economic analysis, an economic criterion is the basis of arranging outcomes of feasible alternatives so they can be judged for economic efficiency. One of the criteria is:

a.Minimize output for fixed input.

b.Minimize output-input for fixed input and output.

c.Maximize output for fixed input.

d.Maximize input for fixed output.