6 Which of the following two project analysis methods do not

6. Which of the following two project analysis methods do not require an incremental analysis when comparing mutually exclusive alternatives? a. Benefit-Cost and Present Worth Analyses b. Annual Equivalent Worth and Rate of Return Analyses c. Annual Equivalent Worth and Present Worth Analyses d. Rate of Return and Benefit-Cost Analyses all of the methods require th A project requires a year zero investment of $750,000, and it returns $250,000 in year 1, $350,000 in year 2, $450,000 in year 3, and $500,000 in year 4. What is the conventional payback period if all the payments occur at the end of the year? 7. a. 0 years b. 1 year c. 2 years d. 3 years e. 4 years You are considering a stock investment now of $100,000. You plan to leave the stock untouched for 9 years and then sell it for an estimated $212,000. What is the IRR? 8. a. 1.13% b. 2.12% c. 8.71% d. 13.3% e. You cannot find the IRR without knowing the MARR first.

Solution

6)

Annual equivalent worth and present worth analysis evaluates the projects in absolute % form and EAA form. These methods identify the project which increase firm value. Hence, incremental analysis is not required.

Hence, correct option is c) Annual equivalent worth and present worth analyses.