2b Answer the following questions Maximum 40 Marks uestion 1

2b Answer the following questions: Maximum 40 Marks uestion 1 (10 Marks Mark true or false and eorreet the false statement one mark for correction: 1. For a very small interest rate, and project duration of two years, the annuity is slightly less than half of the future worth ofthe project. 2. For a payback period, Longer payback period is undesirable in order to minimize the risk of investment 3. If an investment of s 10,000 results in an annual rate of return of $2000 for the following five years, the internal rate of return on this investment is negative. 4. n comparing alternatives for engineering projects, the base alternative is an alternative that requires the least investment of capital. 5. For an investment project, if the annual profit exactly equals the MARR, then the IRR of this project equals the MARR.

Solution

1-F

2-T

3-T

4-F

5-T