The equivalent annual cost method is useful in determining:

Multiple Choice

1. the operating cash flows of a cost-cutting project.

2. the tax shield benefits of depreciation given the purchase of new assets for a project.

3. which one of two machines should be purchased when the machines are mutually exclusive, have different machine lives, and will be replaced once they are worn out.

4. which one of two machines to purchase if the machines are mutually exclusive, have differing lives, and are a one-time purchase.

5.which one of two investments to accept when the investments have different required rates of return.