What is the most appropriate Analysis Period for the four different alternatives shownbelow?ItemFirst CostUniform Annual BenefitSalvage ValueUseful Life in YearsMachine 1$1,244,565$273,804$124,45612Machine 2$2,297,397$413,531$229,74020d. 60 yearse. 12 yearsMachine 3$8,585,814$1,416,659$858,58160Machine 4$3,737,193$672,695$373,71930Incremental Analysis (AIRR)b. 12 years for Machine 1; 20 years for Machine 2; 60 years for Machine 3; and 30years for Machine 4c. The average of the useful lives of the different alternatives, in this case, 30.5years

When alternative projects have different useful lives, the same common useful life for all projects…

Item First Cost Uniform Annual Benefit Salvage Value Useful Life in Years Machine 1 $1,244,565 $273,804 $124,456 12 a Incremental Analysis (AIRR) Machine 2 $2,297,397 $413,531 $229,740 20 Machine 3 $8,585,814 $1,416,659 $858,581 60 Machine 4 $3,737,193 $672,695 $373,719 30

Item First Cost Uniform Annual Benefit Salvage Value Useful Life in Years Machine 1 $1,244,565 $273,804 $124,456 12 a Incremental Analysis (AIRR) Machine 2 $2,297,397 $413,531 $229,740 20 Machine 3 $8,585,814 $1,416,659 $858,581 60 Machine 4 $3,737,193 $672,695 $373,719 30

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

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Concept explainers

Risk Analysis

Risk management is the entire walkthrough process of helping the organization manage risks or avoid them altogether. It is an in-depth study to determine the risks and uncertainties faced by the business and how these impact the objectives and outcomes of the business. Risk analysis is a procedure of risk assessment followed by the management of an organization to avoid risks that may harm the functioning and efficiency of the company.

Question

What is the most appropriate Analysis Period for the four different alternatives shown
below?
Item
First Cost
Uniform Annual Benefit
Salvage Value
Useful Life in Years
Machine 1
$1,244,565
$273,804
$124,456
12
Machine 2
$2,297,397
$413,531
$229,740
20
d. 60 years
e. 12 years
Machine 3
$8,585,814
$1,416,659
$858,581
60
Machine 4
$3,737,193
$672,695
$373,719
30
Incremental Analysis (AIRR)
b. 12 years for Machine 1; 20 years for Machine 2; 60 years for Machine 3; and 30
years for Machine 4
c. The average of the useful lives of the different alternatives, in this case, 30.5
years

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