Q1. The economic Service life of an asset is: a.The number of years “n” at which

Question

Q1. The economic Service life of an asset is:

a.The number of years “n” at which the AW of cost of the asset is at a minimum.

b.The time when the operating cost is at a minimum.

c. The time when the salvage value goes below 25% of the first cost.

d. The length of time required to recover the first cost of the asset.

Q2. In a one-year later replacement analysis, if all estimates are still current and the year is not ND, the action that should be taken is:

a.keep the defender until its market value is equal to the estimated salvage value of the challenger

b. replace the defender with the challenger

c. look for a new challenger and calculate its AW

d. keep the defender one ore year and repeat the same analysis next year

Please explain me why you picked the answer.

Explanation / Answer

1) The correct answer is option (A). The economic Service life of an asset is the number of years “n” at which the AW of cost of the asset is at a minimum. It shows the increase in the supply of the service.

2) The correct answer is option (A). In a one-year later replacement analysis, if all estimates are still current and the year is not ND, the action that should be taken is  keep the defender until its market value is equal to the estimated salvage value of the challenger. IT tends to shortlist the defaulter and makes the efficiency of the output faster and smooth.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.