A Statements a and b are correct. B- Statements a and b are incorrect. C -...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A Statements a and b are correct. B- Statements a and b are incorrect. C - Statement a is correct, the latter being incorrect. D-Statement a is incorrect, the latter being correct. 1. a. B-C ratio reflects the profitability of a certain project. b. B-C ratio can be 0. 2. a. The payback period method doesn't account the time value equivalent of money. b. In payback period method, the salvage value is not accounted because it is not considered a revenue. 3. a. In MARR analysis of a given project for n study period and i% rate, if AW is positive, so should PW and FW. b. If AW is positive in a given project for n study period and i% rate, then FW = PW(1 + i)-¹ = AW(A/F, i%,n). 4. a. If no cash outflow is attributable to a certain project, then ERR Method is impossible. b. The interest rate external to a project in ERR Method must always be less than or equal to MARR. 5. a. The B-C Ratio using conventional method is always greater than B-C Ratio using modified method. b. If the project has no annual maintenance and operational costs, then B-C conventional = B-C modified. 6. a. A B-C Ratio of 1.085 and PW = 0 means that the project is beneficial only, but not profitable. b. In simple payout period, only the salvage value is considered to have a time value. 7. a. The market value is not considered in payback period analysis since it usually goes beyond the study period. b. It is only an assumption that salvage value is not considered in payback period analysis. 8. a. Liquidity alone cannot fully justify a project, nor profitability alone. b. MARR is the true measure of rate of return of a project. 9. a. For a project, a payback period greater than the study period is often desirable. b. B-C Ratio cannot be negative. 10. a. The amount of profit reflects the benefit of a certain project. b. Likewise, the benefit of a project reflects the profit in cash that can be collected from a project. A Statements a and b are correct. B- Statements a and b are incorrect. C - Statement a is correct, the latter being incorrect. D-Statement a is incorrect, the latter being correct. 1. a. B-C ratio reflects the profitability of a certain project. b. B-C ratio can be 0. 2. a. The payback period method doesn't account the time value equivalent of money. b. In payback period method, the salvage value is not accounted because it is not considered a revenue. 3. a. In MARR analysis of a given project for n study period and i% rate, if AW is positive, so should PW and FW. b. If AW is positive in a given project for n study period and i% rate, then FW = PW(1 + i)-¹ = AW(A/F, i%,n). 4. a. If no cash outflow is attributable to a certain project, then ERR Method is impossible. b. The interest rate external to a project in ERR Method must always be less than or equal to MARR. 5. a. The B-C Ratio using conventional method is always greater than B-C Ratio using modified method. b. If the project has no annual maintenance and operational costs, then B-C conventional = B-C modified. 6. a. A B-C Ratio of 1.085 and PW = 0 means that the project is beneficial only, but not profitable. b. In simple payout period, only the salvage value is considered to have a time value. 7. a. The market value is not considered in payback period analysis since it usually goes beyond the study period. b. It is only an assumption that salvage value is not considered in payback period analysis. 8. a. Liquidity alone cannot fully justify a project, nor profitability alone. b. MARR is the true measure of rate of return of a project. 9. a. For a project, a payback period greater than the study period is often desirable. b. B-C Ratio cannot be negative. 10. a. The amount of profit reflects the benefit of a certain project. b. Likewise, the benefit of a project reflects the profit in cash that can be collected from a project.
Expert Answer:
Answer rating: 100% (QA)
1 ANSWER C EXPLANATION The BC ratio is the ratio of benefits to costs A high ratio indicates that a ... View the full answer
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt , Eugene F. Brigham
Posted Date:
Students also viewed these economics questions
-
Please help me with this its urgent please help me for freee How will the social sciences affect your life in the following areas and explain why: Area of Life Effect and why Work / Career Home and...
-
1. a) Suppose you have google sheet and text file in your hand. How do you import this text data into a Google sheet? How do you connect a Google sheet URL into a google data studio ? ( Please do the...
-
Statement of cash flows for years 2019 and 2018 Consolidated Balance Sheets-USD ($) $ in Millions Current assets: 3 Cash and cash equivalents 4 Marketable securities 5 Inventories 5 Accounts...
-
Comparative income statements are available for Johanna's Fine Furs: Required Perform horizontal and vertical analyses on each of the items in the above comparative income statements. Round...
-
A college registrar has received numerous complaints about the online registration procedure at her college, alleging that the system is slow, confusing, and error prone. She wants to estimate the...
-
A viscometer is built from a conical pointed shaft that turns in a conical bearing, as shown. The gap between shaft and bearing is filled with a sample of the test oil. Obtain an algebraic expression...
-
A confidence interval for a mean response and a prediction interval for an individual response are to be constructed from the same data. True or false: The number of degrees of freedom for the...
-
Mr. Bates is creating a college fund for his daughter. He will put in $850 at the end of each year for the next 15 years. He expects to earn 6.35% annually. How much money will his daughter have in...
-
Given the following two tables, which contain function values for f (x) and g(x), use them to evaluate the requested derivative. X 1 f(x) 1 23 3 4 5 4 1 2 f'(x) 2 6 -1 -2 -3 1 2 3 4 5 g(x) 5 3 5 2 1...
-
A feed pump of a binary vapour cycle is of centrifugal and delivers 20m at 750rpm against a dynamic head of 8m. Determine the power required to drive the motor, if the pump efficiency is 90%. If the...
-
Consider the following three-reservoir system: 1 1 2 J 3 2 2 For the system below, determine the magnitude of the flow rate at pipe 3 in [cms]. The system has the following characteristics: Ax1 =...
-
How does the organization cultivate strategic partnerships and alliances to enhance its operational capabilities and expand market reach?
-
A weather balloon has a volume of 2.00x10 4 L 3 on the ground, where the atmospheric pressure is 730 torr and the temperature is 82 o F (27.8 o C). What volume will the gas in the balloon occupy at...
-
Question 2 Technological Adoption: Suppose that we have perfectly competitive input markets (for both capital and labour) and output markets. Firm Tomato Harvesting produces canned tomatoes which it...
-
Assume a parent company acquired a subsidiary on January 1, 2XX1. The purchase price was $440,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, and that...
-
A 33.1kg box initially at rest is pushed 4.4m along a rough, horizontal floor with a constant applied horizontal force of 459.7N. If the coefficient of friction between box and floor is 0.102. Find...
-
Q1-) What is the NPV with the simple project without any options. Draw the Decision Tree. Will you invest? Q2-) Assume you have ONLY the abandon option given in the question. Draw the Decision Tree....
-
A 20-cm-square vertical plate is heated to a temperature of 30oC and submerged in glycerin at 10oC. Calculate the heat lost from both sides of the plate.
-
Define the term net present value (NPV). What is each franchises NPV?
-
What sources of capital should be included when you estimate Harry Daviss weighted average cost of capital (WACC)?
-
The Berndt Corporation expects to have sales of $12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be $1.5 million. All sales revenues will be...
-
The marginal density function of \(x\) can be determined form the bivariate density function \(p(x, y)\) as a. \(p(x)=\int_{-\infty}^{\infty} p(x, y) d y\) b. \(p(x)=\int_{-\infty}^{\infty} p(x, y) d...
-
Fill in the Blank. Univariate distributions describe the probability distributions of __________ random variables.
-
What is a marginal density function?
Study smarter with the SolutionInn App