Question

Problems 6, 7 and 8 use the following table: five alternatives are being evaluated by the incrementar rate of return method. Incremental Rate of Return, % Initial Overall ROR Alternative Investment, $ versus DN, % A B C D E - 25,000 9.6 27.3 9.4 35.3 25.0 -35,000 15.1 0 38.5 24.4 - 40,000 13.4 - 46.5 27.3 - 60,000 25.4 -75,000 20.2 6.8 6. If the projects are mutually exclusive and the minimum attractive rate of return is 14% per year, the best alternative is: (a) B (b) C (c) D (d) E 7. If the projects are mutually exclusive and the MARR is 20% per year, the best (a) B (b) (c)D (d) E 8. If the projects are independent, instead of mutually exclusive, the one or ones 18% per year are: (a) B and C (b) B, D, and E (c) D and E (d) B, C, and E 9. When accelerated depreciation methods or shortened recovery periods are ap income taxes due. Of the following, the statements that are commonly incorrec 1. Total taxes paid are the same for all depreciation methods. 2. Present worth of taxes is lower for shorter recovery periods. 3. Accelerated depreciation imposes more taxes in the later years of the recove 4. Present worth of taxes is higher for shorter recovery periods. ( a ) 1, 2, and 3 (b) 1 and 4 (c)2 (d) 4 10. In conducting a formalized sensitivity analysis using three estimates, the (a) Strategic, pessimistic, real likely: Deterministic, realistic, optimistic Optimistic, pessimistic, most likely o realistic nrobabilistic

Answer 1

Ans

6. The best alternative among the given ones will be B since MARR is 14% and B is offering more than this with minimum initial investment.

7.Option D is the best option in this case since MARR is 20 %

8.Option D and E is the corrrec option in this case .