An investment alternative will cost JMD $65,000,000 to implement for the GOJ. This alternative will be a heavy-duty equipment with a useful life of 10 years and a salvage value of JMD $5,000,000. The annual maintenance and operation cost is estimated to be JMD $1,250,000. The savings that must be generated annually to recoup the invested capital is the

a.

Annual Worth

b.

Salvage Value

c.

Capital Recovery

d.

Revenue

The most widely used depreciation method for tax and financial reporting is

a.

MACRS

b.

DDB

c.

SL

d.

SOYD

True or false. For independent projects use of equal life service is not required.

Select one:

True

False

Your company undertakes multiple capital projects in any given year. The MARR that directors expect is 15%. For a project under analysis, the PW returns a value of $1,000,000. Which statement below is correct?

a.

The IRR can only be calculated when compared to another alternative

b.

The IRR of the project is greater than the MARR (answer)

c.

The IRR of the project is 15%

d.

The project can be salvaged for $1,000,000

All of the following are usually depreciable with the exception of

a.

Office furniture

b.

Construction vehicles

c.

Manufacturing equipment

d.

Land used for grazing cattle

A depreciable asset costs $30,000 and has a salvage value of $10,000 at the end of its 5-year life. What is the allowable depreciation in year one? if 2/n = 0.4

a.

$5000

b.

$12000

c.

$6000

d.

$4000

Which financial accounting tool is used to "record all financial transactions"

a.

journal

b.

income statement

c.

ledger

d.

trial balance

Two alternatives are being compared on a future worth basis. Alternative A has a life of 10 years, Alt B has a life of 4 years. What "n" value should be used to compare both?

a.

10 years

b.

10 years for Alt A, 4 years for Alt B

c.

4 years

d.

20 years

All of the following are usually included in an engineering economic analysis except

a.

Variable costs

b.

Sunk Costs

c.

Total Revenue

d.

Fixed costs

The present worth of an alternative that provides infinite service is called its:

a.

Discounted Total Cost

b.

Perpetual Annual Cost

c.

Net Present Value

d.

Capitalized Cost