6. If the Minimum Attractive Rate of Return (MARR) is used as the interest rate i,...
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6. If the Minimum Attractive Rate of Return (MARR) is used as the interest rate i, which of the following decision rules can be used to determine a project's economic worthiness? (a) The annual worth method: If AW (-MARR) 20, the project is economically justified. (b) The present worth method: If PW (i=MARR) ≥ 0, the project is economically justified. (c) The future worth method: If FW (i=MARR) > 0, the project is economically justified. ((d) All of the listed decision rules are valid. 7. Choose the statement that best describes the cash flow diagrams below if the interest rate is 10% per year. For full credit, show calculation(s) to justify your answer. 5M 1 6M 2 EOY 4M 3 3M 4 5M SM 5M SM 0 1 2 EOY 3 4 (a) The two cash flows are equivalent. (b) To compare the annual worth of the two cash flows, compute the arithmetic mean of the cash flows in the diagram on the left. (c) The cash flow diagram on the left has the greatest present worth. (d) The cash flow diagram on the right has the greatest present worth. Qu A: Ö A: Ö A: 6. If the Minimum Attractive Rate of Return (MARR) is used as the interest rate i, which of the following decision rules can be used to determine a project's economic worthiness? (a) The annual worth method: If AW (-MARR) 20, the project is economically justified. (b) The present worth method: If PW (i=MARR) ≥ 0, the project is economically justified. (c) The future worth method: If FW (i=MARR) > 0, the project is economically justified. ((d) All of the listed decision rules are valid. 7. Choose the statement that best describes the cash flow diagrams below if the interest rate is 10% per year. For full credit, show calculation(s) to justify your answer. 5M 1 6M 2 EOY 4M 3 3M 4 5M SM 5M SM 0 1 2 EOY 3 4 (a) The two cash flows are equivalent. (b) To compare the annual worth of the two cash flows, compute the arithmetic mean of the cash flows in the diagram on the left. (c) The cash flow diagram on the left has the greatest present worth. (d) The cash flow diagram on the right has the greatest present worth. Qu A: Ö A: Ö A:
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Question 6 A project is said to be worth investing if Annual worth at MARR present worth at ... View the full answer
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