When will the conventional payback method and discounted payback method yield the same result? A. Always B.
Question:
When will the conventional payback method and discounted payback method yield the same result?
A. | Always | |
B. | Never | |
C. | If and only if the interest (discount) rate for the discounted payback method is much lower than the conventional method. | |
D. | No conclusions can be drawn based on the statement. | |
E. | When the interest rate is zero. |
Two mutually exclusive project alternatives are being considered, where both project lives are shorter than the infinite project analysis period. The first alternative has a 5-year project life, while the second alternative has a 3-year project life. What is the best viable finite analysis period?
A. | 2 years | |
B. | 15 years | |
C. | 5 years | |
D. | 3 years | |
E. | 8 years | |
F. | None of the options in this list are correct. |
The drawbacks of the payback screening method includes ___________ (select all that apply)
A. | Only helping screen projects in firms that are not capital constrained. | |
B. | Being meaningful only if the discount method is applied. | |
C. | Inability to gauge the earning potential of a project. | |
D. | Ignoring the timing of cash flows. | |
E. | Fails to reveal how much of the invested funds is contributing towards interest expenses. |
A program is examining several revenue project alternatives, which are NOT mutually exclusive. The design and manufacturing firm earns an average of 15% on its invested capital. Which projects would be a selected if the new goal is to exceed the average? (select all that apply)
A. | PW(15%) = - $100,000 | |
B. | PW(15%) = 0 | |
C. | PW(15%) = - $50,000 | |
D. | PW(15%) = $0.50 | |
E. | PW(15%) = $3,000 |
A program manager is examining several solution alternatives for a service project --so the decisions ARE MUTUALLY EXCLUSIVE. Which project(s) should be selected if the interest rate is 15%?
A. | PW(15%) = 0 | |
B. | PW(15%) = $100,000 | |
C. | PW(15%) = $50,000 | |
D. | PW(15%) = $3,000 | |
E. | PW(15%) = $0.50 |