A business is considering the purchase of one of the following small devices: First Cost Annual Benefit Device A Device B Device C Device D 4,000 800 6,500 8,500 10,500 1,050 1,400 1,550 Each alternative has a 10-year useful life. The business uses a MARR of 8%. Select the closest choice to your solution and ONLY TYPE THE LETTER IN THE BLANK (A, B, C, D). (Q1) The ROR for Alternative A is closet to (Q2) (Q3) A. 17.5% B. 11.2% C. 14.8% D. 13.4% Answer for (Q1): The AROR for the (B-A) Increment is closet to A. 12.5% B. 9.6% C. 10.6% D. 8% Answer for (Q2): The AROR for the (C-B) Increment is closet to A. 8.1% B. 6.8% C. 9% D. 10.6% Answer for (Q3):
A business is considering the purchase of one of the following small devices: First Cost Annual Benefit Device A Device B Device C Device D 4,000 800 6,500 8,500 10,500 1,050 1,400 1,550 Each alternative has a 10-year useful life. The business uses a MARR of 8%. Select the closest choice to your solution and ONLY TYPE THE LETTER IN THE BLANK (A, B, C, D). (Q1) The ROR for Alternative A is closet to (Q2) (Q3) A. 17.5% B. 11.2% C. 14.8% D. 13.4% Answer for (Q1): The AROR for the (B-A) Increment is closet to A. 12.5% B. 9.6% C. 10.6% D. 8% Answer for (Q2): The AROR for the (C-B) Increment is closet to A. 8.1% B. 6.8% C. 9% D. 10.6% Answer for (Q3):
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter11: Strategic Cost Management
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Problem 6E: Keith Golding has decided to purchase a personal computer. He has narrowed his choices to two: Brand...
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Question
D2)

Transcribed Image Text:A business is considering the purchase of one of the following small devices:
Device A
4,000
Device B
6,500
1,050
Device C
8,500
1,400
Device D
10,500
1,550
First Cost
Annual Benefit
800
Each alternative has a 10-year useful life. The business uses a MARR of 8%.
Select the closest choice to your solution and ONLY TYPE THE LETTER IN THE BLANK (A, B, C, D).
(Q1) The ROR for Alternative A is closet to
A. 17.5%
B. 11.2%
C. 14.8%
D. 13.4%
Answer for (Q1):
(Q2)
The AROR for the (B-A) Increment is closet to
A. 12.5%
B. 9.6%
C. 10.6%
D. 8%
Answer for (Q2):
The AROR for the (C- B) Increment is closet to
A 8.1%
B. 6.8%
C. 9%
D. 10.6%
Answer for (Q3):
(Q3)
Based on the incremental rate of return analysis, the best device should be
A. Device B
B. Device C
C. Device A
D. Device D
(Q4)
Answer for (Q4):
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