Question 4 - Open questions (25 points) Answer each question clearly with your own words. Question 4.1 - If a certain project has a sensitivity of x=-0.29 for Annual Savings. What was the original decision of the project? Explain your reasoning in your own words. (5 points) Question 4.2- If a certain project has a negative FW. The sensitivity (x=?) for annual expenses will be positive or negative? Explain your reasoning in your own words. (5 points) Question 4.3 - 3 projects have the following IRR: Project 1 - IRR = 20.4% Project 2 - IRR = 16.8% Project 3 - IRR = 12.6% Which project should be selected? Explain your reasoning in your own words. (5 points) Question 4.4 - 3 projects have the following Benefits, when evaluated using PW: Project 1 - PW of Benefits=8,700 Project 2 - PW of Benefits=9,000 Project 3 - PW of Benefits= 14,200 Which project should be selected? Explain your reasoning in your own words. (5 points) Question 4.5 - Regarding public and private projects, please answer the following questions when there are several mutually exclusive alternatives for each type of project: a. What method would you recommend for selecting the best private project? Why? b. What method would you recommend for selecting the best public project? Why? c. What are the differences between private and public projects? (5 points) Question 4 - Open questions (25 points) Answer each question clearly with your own words. Question 4.1 - If a certain project has a sensitivity of x=-0.29 for Annual Savings. What was the original decision of the project? Explain your reasoning in your own words. (5 points) Question 4.2- If a certain project has a negative FW. The sensitivity (x=?) for annual expenses will be positive or negative? Explain your reasoning in your own words. (5 points) Question 4.3 - 3 projects have the following IRR: Project 1 - IRR = 20.4% Project 2 - IRR = 16.8% Project 3 - IRR = 12.6% Which project should be selected? Explain your reasoning in your own words. (5 points) Question 4.4 - 3 projects have the following Benefits, when evaluated using PW: Project 1 - PW of Benefits=8,700 Project 2 - PW of Benefits=9,000 Project 3 - PW of Benefits= 14,200 Which project should be selected? Explain your reasoning in your own words. (5 points) Question 4.5 - Regarding public and private projects, please answer the following questions when there are several mutually exclusive alternatives for each type of project: a. What method would you recommend for selecting the best private project? Why? b. What method would you recommend for selecting the best public project? Why? c. What are the differences between private and public projects? (5 points)
