Question 1

1. The present value of an infinite stream of AEs of the project is equal to the net present value of the constant chain of replacement of the project in perpetuity. NPV = NPV*(1+k) ⁿ/((1+k) ⁿ-1).

   True

   False

Question 2

1. The present value of an infinite stream of AEs of the project is equal to the net present value of the constant chain of replacement of the project in perpetuity. NPV = NPV*(1+k) ⁿ/((1+k) ⁿ-1).

   True

   False

Question 3

For mutually exclusive projects, with unequal lives and replacement, the Annual Equivalent [AE] method will always pick the best project even though it does not measure the increase in value.

True

False