It is important to analyze significantly unequal project lives using either the equivalent annuity approach (EAA) or the replacement chain approach (RCA) if the projects are O mutually exclusive and repeatable O independent and repeatable O mutually exclusive O mutually exclusive with a high probability of repetition O independent
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- When choosing between two projects of different scales, which of the following methodologies is best employed? a. Probability index to rank projects b. Equivalent annuities method c. Replacement chain method d. IRR methodIn which situation are the project lives unequal?e. IMPORTANT Note that from this example that a higher IRR for a nindividual alternative does not gurantee that the alternatvie is more economical than the one with a lower IRR. It is the incremental IRR value relative to the MARR that determines which alternative is more economical. The result of the incremental analysis are always the same as those of the PW,AW, or FW anaylsis
- When the net present value (NPV) and the internal rate of return (IRR) rankings conflict for mutually exclusive projects Blank______. Multiple choice question. accept the project with the higher IRR accept the project with the lower NPV accept the project with the lower IRR accept the project with the higher NPVWhich of the following statement is correct Select one: a. A project is accepted when profitability index will be greater than one b. All statements are correct c. A project is accepted when net present value is greater than zero d. A project is accepted when payback period is less than the other projectA situation in which taking one investment prevents the taking of another is(are) called: O Net present value profiling. Operational ambiguity. Mutually exclusive projects. O Issues of scale. O Multiple rates of return.
- Which of the following were listed as potential Problems or Issues associated with Using a Rate of Return Approach to justifying single or multiple Mutually Exclusive projects? Note: This is a Multiple Answer question. Please select all of the following options you think are correct? O The ROR calculations are typically more complex than the PW, AW, or FW methods and frequently require the use of trial and error techniques. O You cannot rely on the best Mutually Exclusive project to have the highest ROR. O An incremental approach is required to reliably determine the best project when comparing multiple Mutually Exclusive projects with the ROR approach. O This method assumes that any net positive cash flows are reinvested at the ROR rate. If the ROR rate is substantially larger than MARR, this might not be a realistic assumption. OFor any sequence of Net Cash Flows with more than one sign chance over the life of the project there may be more than one ROR value that satisfies the Rate…When projects have scale differences, only the Net Present Value method will rank the projects correctly True FalseTrue or False If several independent projects are considered, the one(s) with the highest PIs should be chosen If two mutually exclusive projects are under consideration and using the PI for analyzing the projects, then only the one with the higher PI should be selected.
- A project should be accepted if its return is Blank______ the required return. Multiple choice question. not equal to equal to aboveWhy are NPV, BCR, and IRR considered SUPERIOR indicators of Project Feasibility compared to Payback or Recoupment Period and Accounting Rates of Return? Explain briefly.State whether the following statement true or false and provide a brief explanation