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:

Environmental Risks

Potential dangers or hazards from the natural or built environment that can affect individual or public health, safety, and well-being.

American Society

The social structure, cultural practices, and institutions found within the United States.

Normal Accidents

Those that occur inevitably though unpredictably due to the very complexity of modern technologies.

Charles Perrow

Charles Perrow is a sociologist known for his research on organizations, particularly his conceptual framework on "normal accidents" related to technological systems.