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A larger salvage value, other things equal,

  • A.makes the annual cost impossible to compute
  • B.reduces the equivalent uniform annual cost
  • C.increases the equivalent uniform annual cost
  • D.leaves the annual cost unchanged

Answer: B

Part of the capital is recovered at disposal instead of having to be earned from operations, so less must be recovered annually. Being at the far end of the life, however, it is discounted heavily and often matters less than expected.

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