Q1: The capital & running costs of similar machines having unequal service life can be compared by the __________ method.

ANS:D - capitalised cost

Capitalized cost refers to the process of converting the total cost of an asset or investment into a single lump-sum value. This lump-sum value represents the present worth of all future costs associated with the asset or investment. In financial analysis, capitalizing costs allows for the comparison of different investment options or projects on a uniform basis. It takes into account not only the initial cost of acquiring the asset but also the anticipated costs over its entire useful life, such as maintenance, repairs, operating expenses, and eventual disposal costs. The process of capitalizing costs involves discounting all future cash flows associated with the asset to their present value using an appropriate discount rate. This discount rate typically reflects the time value of money and the risk associated with the investment. Capitalized cost analysis helps decision-makers evaluate the economic feasibility of various investment alternatives by providing a comprehensive view of the total cost implications over the asset's life cycle. It enables comparisons between alternatives with different cost structures and time horizons, facilitating informed decision-making in resource allocation and capital budgeting.