Which of the following statements are correct in the context of Annual Worth Value Calculations? Note: This is a Multiple Answers question so please select all of the options you believe are correct. O If the period of need is greater or equal to the Least Common Multiple (LCM) of the lives of all of the alternatives, then we simply need to compare the Annual Worth (AW) of each alternative over one life cycle to determine the best project. If each project alternative is allowed to complete its full life, we can assume that the AW for the full life cycle will be exactly the same for each additional full life cycle. O You must use an incremental project justification approach when comparing two or more Mutually Exclusive Projects when using Annual Worth (AW) project values. E The output of an Annual Worth Value Calculation is easy to understand and communicate because it is stated in terms of dollars per year. The decision criteria used to evaluate a single project using the AW method is to accept a project if its AW value, (calculated with a discount rate (i) equal to MARR), is greaten than Zero.
Which of the following statements are correct in the context of Annual Worth Value Calculations? Note: This is a Multiple Answers question so please select all of the options you believe are correct. O If the period of need is greater or equal to the Least Common Multiple (LCM) of the lives of all of the alternatives, then we simply need to compare the Annual Worth (AW) of each alternative over one life cycle to determine the best project. If each project alternative is allowed to complete its full life, we can assume that the AW for the full life cycle will be exactly the same for each additional full life cycle. O You must use an incremental project justification approach when comparing two or more Mutually Exclusive Projects when using Annual Worth (AW) project values. E The output of an Annual Worth Value Calculation is easy to understand and communicate because it is stated in terms of dollars per year. The decision criteria used to evaluate a single project using the AW method is to accept a project if its AW value, (calculated with a discount rate (i) equal to MARR), is greaten than Zero.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:**Title: Evaluation Criteria in Annual Worth Value Calculations**
**Question:**
Which of the following statements are correct in the context of Annual Worth Value Calculations?
**Note:** This is a Multiple Answers question, so please select all of the options you believe are correct.
**Options:**
1. If the period of need is greater or equal to the Least Common Multiple (LCM) of the lives of all of the alternatives, then we simply need to compare the Annual Worth (AW) of each alternative over one life cycle to determine the best project.
2. If each project alternative is allowed to complete its full life, we can assume that the AW for the full life cycle will be exactly the same for each additional full life cycle.
3. You must use an incremental project justification approach when comparing two or more Mutually Exclusive Projects when using Annual Worth (AW) project values.
4. The output of an Annual Worth Value Calculation is easy to understand and communicate because it is stated in terms of dollars per year.
5. The decision criteria used to evaluate a single project using the AW method is to accept a project if its AW value, (calculated with a discount rate (i) equal to MARR), is greater than Zero.
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