Answered: EOY Alternative W Alternative X…

EOY Alternative W Alternative X -$100,000 -$150,000 1 $20,000 $40,000 $20,000 $45,000 3 $50,000 $50,000 $80,000 $55,000 5 $110,000 $60,000 6. $65,000 7 $70,000 4-

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.

Question

Consider the two one-shot investment alternatives shown in the table below. Neither alternative is expected to be available again in the future. MARR is 11%/year. Based on a present worth analysis, which alternative is preferred?

EOY Alternative W Alternative X
-$100,000
-$150,000
1
$20,000
$40,000
$20,000
$45,000
3
$50,000
$50,000
$80,000
$55,000
5
$110,000
$60,000
6.
$65,000
7
$70,000
4-

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