COMPARING ALTERNATIVE

Question 2

A variety of methods exists for selecting the superior alternative
from a group of proposals.

Answer 2

rate of return, annual worth, present worth, future worth and
payback period and cost-benefit analysis.

Question 3

When two or more alternatives are capable of performing the same
functions, the economically superior alternative would be the

Answer 3

largest
present worth.

Question 4

From
that point since we are pertaining to cost, the alternative with ___ is the best option.

Answer 4

least present worth cost

Question 5

is exactly comparable to the present worth method except that all cash inflows and outflows are compounded forward to a reference point in time
called the future.

Answer 5

Future Worth Analysis.

Question 6

Alternatives that accomplish the same purpose but that have
unequal lives must be compared by the

Answer 6

annual cost method.

Question 7

The annual cost method assumes that each alternative will be
__________.

Answer 7

replaced by an identical twin at the end of its useful life (i.e.,
infinite renewal).

Question 8

The calculated annual cost is known as the

Answer 8

equivalent uniform
annual cost (EUAC) or equivalent annual cost (EAC).

Question 9

Cost is
a positive number when

Answer 9

expenses exceed income.

Question 10

effective annual interest rate at which an investment accrues income.

Answer 10

rate of return (ROR)