QUESTION 1 Given a MARR, an alternative project is considered acceptable by the

Question

QUESTION 1 Given a MARR, an alternative project is considered acceptable by the following ratio: O Sum(Costs) / Sum(Benefits)>- 1.0 PW(Benefits)/ PW(Costs)>- 1.0 @ PW(Costs)/ PW(Benefits) >#1.0 Sum(Benefits) / Sum(Costs) >- 1.0 QUESTION 2 The internal rate of return is the interest rate which on firm uses to lend money to other firms the interest rate at which the equivalent benefits are equal to equivalent costs the interest cost of liabilities and equity the interest rate of borrowing money

Explanation / Answer

Answer : 1) The correct option is B.

If present worth (PW) of benefit / present worth (PW) of cost is positive for given MARR then the project is acceptable. This means option B brings the correct answer for given statement.

2) The correct option is D.

IRR (Interest Rate of Return) is the interest rate which is charged on borrowings. In case of IRR, the net present value (NPV) for cash flow (both positive and negative) is equal to zero .

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