QUESTION

A project costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 in year 1, increasing by $4000 each year. What is the PW of this project? I = 12%

a.

$150, 377

b.

$-150,260

c.

$12, 338

d.

$2731

A depreciable asset costs $3,000 and has a useful life of 5 years. The estimated salvage value is $1,000. Using double-declining balance, what is the allowable depreciation for year 2 of the asset?

a.

$800

b.

$1200

c.

$600

d.

$720

Tooling for a robotic arm used in the automotive industry costs $15,000 and has an estimated salvage value of $1,000 at the end of a 3-year life. The second-year MACRS depreciation is closest to

a.

$6,668

b.

$6,223

c.

$4,667

d.

$5,000

When comparing mutually exclusive alternatives that have different lives by the present worth method, it is necessary to:

a.

Always compare them over a period equal to the life of the shorter-lived alternative

b.

Always compare them over a time period of equal service

c.

Find the present worth over one life cycle of each alternative

d.

Always compare them over a period equal to the life of the longer-lived alternative

After you have conducted a future worth comparison of alternatives, what factor do you multiply the FW values by in order to obtain the AW values of the alternatives?

a.

(A/P, i, n)

b.

(A/F, i, n)

c.

(F/P, i, n)

d.

(F/A, i, n)