Answered: :If the annual worth value of an…

:If the annual worth value of an alternative is equals to a positive value, we consider this project as Not compared with MARR Below MARR Exceeding MARR Meeting MARR

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 3DQ

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Question

:If the annual worth value of an alternative is equals to a positive value, we consider this project as
Not compared with MARR
Below MARR
Exceeding MARR
Meeting MARR

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Which of the following statements are correct in the context of Annual Worth Value Calculations? Note: This is a Multiple Answers question so please select all of the options you believe are correct. O If the period of need is greater or equal to the Least Common Multiple (LCM) of the lives of all of the alternatives, then we simply need to compare the Annual Worth (AW) of each alternative over one life cycle to determine the best project. O If each project alternative is allowed to complete its full life, we can assume that the AW for the full life cycle will be exactly the same for each additional full life cycle. O You must use an incremental project justification approach when comparing two or more Mutually Exclusive Projects when using Annual Worth (AW) project values. E The output of an Annual Worth Value Calculation is easy to understand and communicate because it is stated in terms of dollars per vear. The decision criteria used to evaluate a single project using the AW method…
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