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An abandonment or retirement decision differs from a replacement decision in that no

  • A.discount rate need be assumed
  • B.challenger is being considered
  • C.market value is involved
  • D.operating cost is involved

Answer: B

Correct answer: challenger is being considered

Abandonment asks whether to continue the service at all, so the comparison is between keeping the asset and disposing of it, with nothing proposed in its place. Replacement asks which asset should provide a service that will continue either way. Discount rate, market value and operating costs all figure in both.

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