Engineering economics 1) Under annual cash flow analysis if project A and B are

Question

Engineering economics

1)   Under annual cash flow analysis if project A and B are of unequal lives but are for a continuing requirement with identical replacement after their respective useful lives, the analysis period is

A) maximum life of the alternatives

B) minimum life of the alternatives

C) the respective life of the alternatives

D) always the common project life

2) Internal rate of return is

A) The interest rate of borrowing money

B) the interest rate which on firm uses to lend money to other firms

C) the interest rate at which the equivalent benedits are equal to the equivalent cost

D) the interest cost of liabilities and equity

3) In investment incremental rate of return analysis, paired alternatives are compared and selection is made:

A) If NPV (benefits) EUAC select the higher cost contender, else if NPV (benefits) < EUAC keep the lower cost present selection.

B) If NPV (benefits) EUAC keep the lower cost present selection, else if NPV (benefits) < EUAC select the higher cost contender.

C) If IRR MARR select the higher cost contender, else if IRR < MARR keep the lower cost present selection.

D) If IRR MARR keep the lower cost present selection, else if IRR < MARR select the higher cost contender.

4) when the analysis period is infinite under annual cash flow analysis,

A) EUAW infinite = (EUAC-EUAB)IRR

B) EUAW infinite = P MARR

C) EUAC infinite =Fi+ other annual cost

D) EUAC infinite = Pi + other annual cost

5) MARR is defined as

A) Risk adjusted, weighted average cost of alternatives

B) Risk adjusted, weighted average cost of investment

C) Risk adjusted, weighted average cost of cash flow

D) Risk adjusted, weighted average cost of liabilities and equity

Explanation / Answer

1)   Under annual cash flow analysis if project A and B are of unequal lives but are for a continuing requirement with identical replacement after their respective useful lives, the analysis period is

Ans :

C) the respective life of the alternatives

2) Internal rate of return is

Ans :

C) the interest rate at which the equivalent benedits are equal to the equivalent cost

3) In investment incremental rate of return analysis, paired alternatives are compared and selection is made:

Ans :

C) If IRR MARR select the higher cost contender, else if IRR < MARR keep the lower cost present selection.

4) when the analysis period is infinite under annual cash flow analysis,

Ans :

D) EUAC infinite = Pi + other annual cost

5) MARR is defined as

B) Risk adjusted, weighted average cost of investment

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