Which One of the Following Statements Is True Concerning Project

question 143

Multiple Choice

Which one of the following statements is true concerning project analysis?

• A) Net present value is the best method to use when analyzing cost saving projects involving equipment that will be replaced at the end of the project and the options available have different project lives.
• B) The internal rate of return is the best method of analysis when the projects under consideration are cost cutting projects with negative cash flows for all time periods.
• C) The internal rate of return is the best method of analysis when two or more cost cutting projects, with differing initial costs, are being compared because the method incorporates the time value of money concept.
• D) No matter the circumstances, net present value is always considered to be the best method of analysis as it considers all relevant cash flows and incorporates the time value of money theory.
• E) For cost cutting proposals where a decision is being made between two or more pieces of equipment with differing lives, the equivalent annual cost method is considered superior to the net present value method if the equipment is to be replaced at the end of its life.

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Definitions:

Rehearsal

A cognitive process involving the repetition of information to be remembered, enhancing memory retention.

Elaborative Rehearsal

A memory strategy that involves relating new information to something that is already known.

Short-term Memory

A cognitive function where a limited amount of information is held temporarily for use in ongoing tasks.

Displacement

In psychology, displacement is a defense mechanism that involves shifting feelings from an uncomfortable or threatening target to a more acceptable or less threatening one.