Which One of the Following Statements Is True Concerning Project

question 130

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:

Mitigate Damages

The legal principle requiring a party suffering loss to take reasonable action to minimize the amount of the loss.

Wrongful Dismissal

The termination of an employee's contract of employment in violation of the contract or statutory law.

Senior Management

The highest level of executives and managers in an organization who are responsible for its overall operations and strategy.

Implied Repudiation

A situation where one party's actions or statements indicate an intention not to fulfill contractual obligations, thus leading to a breach of contract.