Chapter Review: True or False Quiz

This online quiz contains 7 questions. Click on the button next to the selection that best answers the question. To review your results, click on the Submit Answers button displayed after the last question. Good luck!

1		In conducting a replacement analysis, the amount of money currently owed on the existing asset is used as its present value, not its original cost.
			A)	TRUE
			B)	FALSE
2		If the trade-in value of the currently-owned asset is higher than the asset's initial purchase price, the lower value should be used in the replacement analysis.
			A)	TRUE
			B)	FALSE
3		When the market value of a presently-owned asset is lower than its initial cost, the difference is treated as a sunk cost.
			A)	TRUE
			B)	FALSE
4		In conducting a replacement analysis over a specified planning horizon (study period), the horizon selected could be shorter, equal to, or longer than the remaining life of the currently owned asset.
			A)	TRUE
			B)	FALSE
5		If it is necessary to use the cash-flow approach in a replacement analysis (i.e., subtracting the trade-in value from the initial cost of the challenger), the remaining life of the defender must be the same as that of the challenger.
			A)	TRUE
			B)	FALSE
6		The economic service life (ESL) of an asset is determined by calculating its annual worth over different life periods and selecting the time coinciding with the lowest cost value.
			A)	TRUE
			B)	FALSE
7		If the market value of the defender is greater than the breakeven replacement value determined by equating the defender and challenger AW relations, keep the defender.
			A)	TRUE
			B)	FALSE