In Order to Effectively Analyze the Relative Merits of Two

question 5

Multiple Choice

In order to effectively analyze the relative merits of two options, policy analysts must first:

• A) Judge each option on the basis of the same specific criteria.
• B) Consider to what extent each option meets a social justice criteria.
• C) Decide if an option will be cost effective.
• D) Choose which option they prefer.

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Definitions:

Annual Cash Inflow

The total amount of money received by a company over a year, including revenues from sales, investments, and other sources.

Net Present Value

An economic indicator that finds the disparity between cash inflows' present value and the present value of cash outflows during a certain period.

Discount Rate

A rate used to determine the present value of future cash flows; it's often used in discounted cash flow analysis to account for the time value of money.

Net Present Value

The variance between cash inflows and outflows' present value over time, utilized to evaluate an investment's profitability.