For a very small interest rate, and project duration of two years, the annuity i

Question

For a very small interest rate, and project duration of two years, the annuity is slightly less than half of the future worth of the project. For a payback period, Longer payback period is undesirable in order to minimize the risk of investment. If an investment of $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. In comparing alternatives for engineering projects, the base alternative is an alternative that requires the least investment of capital. For an investment project, if the annual profit exactly equals the MARR, then the IRR of this project equals the MARR.

Explanation / Answer

False the value of the annuity is dependent on the present worth and the interest rates, both of the variables should be known to measure the future worth. True True True False, for a profit from the investment, the IRR has to be negative.

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