Which of the Following Statements Is FALSE

question 1

Multiple Choice

Which of the following statements is FALSE?

• A)Traditionally,managers have used the equivalent annual benefit method to choose between projects of different lives.
• B)The equivalent annual benefit method ignores the value of any real options because it assumes that the projects will always be replaced at their original terms.
• C)If the future costs (or benefits)are certain with mutually exclusive projects,then we must use a real options approach to determine the correct decision.
• D)The equivalent annual benefit method accounts for the difference in project lengths by calculating the constant payment over the life of the project that is equivalent to receiving the NPV today and then selecting the project with the higher equivalent annual benefit.

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Definitions:

Unfamiliar

Not known or recognized, often referring to concepts, words, or environments that are not understood due to a lack of experience.

Skeptical

Having doubts or reservations about the truth or reliability of something without sufficient evidence or proof.

Hostile

Exhibiting or marked by unfriendliness or opposition, often creating a challenging or adversarial environment.

Persuade

The act of convincing someone to do or believe something through reasoning or argument.