Annual Worth Comparison Method

question 14

Multiple Choice

Annual worth comparison method

• A)should be used widely because it does not have to assume a fixed minimum acceptable rate of return over the duration of a project.
• B)can be preferable to the payback period method because the latter discriminates over the short-term projects.
• C)should be used whenever it requires less calculations than the present worth method since the two methods lead to the same result for projects with equal lives.
• D)can provide more accurate estimates of a project worth for the related but not mutually exclusive projects then other methods.
• E)is always preferred to the present worth method for comparison of two projects with the same service lives.

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Definitions:

Investment Date

The specific date on which an investment is made or acquired by an investor, marking the commencement of recognition in financial statements.

Acquisition Date

The effective date on which control of a business or asset is obtained by the acquirer.

Declaration Date

The specific date on which a company announces a dividend or distribution to its shareholders.

Dividends Payable

A liability recorded on the company's balance sheet representing the amount of declared dividends that are owed to shareholders but have not yet been paid.