When Comparing Two Projects with Different Lives,why Do You Compute

question 11

Multiple Choice

When comparing two projects with different lives,why do you compute an annuity with an equivalent present value (PV) to the net present value (NPV) ?

• A)so that you can see which project has the greatest net present value (NPV)
• B)so that the projects can be compared on their cost or value created per year
• C)to reduce the danger that changes in the estimate of the discount rate will lead to choosing the project with a shorter time frame
• D)to ensure that cash flows from the project with a longer life that occur after the project with the shorter life has ended are considered
• E)to avoid complications arising from alternating cash inflows and outflows

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Definitions:

Matrix Departmentation

Is a combination of functional and divisional patterns wherein an individual is assigned to more than one type of unit.

Total Quality Management

An ongoing process of improvement involving all members of an organization to enhance quality and meet or exceed customer expectations.

Participative Management

A management style where employees at all levels are encouraged to contribute ideas towards identifying and solving problems, making decisions, and improving productivity.

Empowerment

The process by which managers help others to acquire and use the power needed to make decisions affecting themselves and their work.