Y5

2. MCQ&T/F Questions (5 points each) 1. If the present worth of a project is nonnegative than it is economically justified. a . True b. False 2. A project is economically feasible if IRR is greater than or equal to MARR. a. True b. False 3. Future equivalent of only cash inflows at the end of the project horizon are calculated in future worth analysis. a. True b. False 4. Annual worth method used to compare alternatives that accomplish the same purpose but have only equal lives. a. True b. False 5. Compare the two following alternatives in terms of future worth using MARR = 8% Alternative 1: First cost: 42,000 Yearly cost 6,000 Salvage value: 6,000 Lifetime: 5 Alternative 2: First cost: 79,000 Yearly cost 3,000 Salvage value: 12,000 Lifetime: 10 a. Alt 1: $-224,490, Alt 2: $-202,015 b. Alt 1: $-718,368, Alt 2: $-535,339 c. Alt 1: $-426,531, Alt 2: $-616,145 d. Alt 1: $-121,677, Alt 2: $-202,015 6. The rate of return for alternative X is 18% per year and for alternative Y is 15% per year, with Y requiring a larger initial investment. If a company has a minimum attractive rate of return of 16% per year, a. The company should select alternative X. b. The company should select alternative Y. c. The company should conduct an incremental analysis between X and Y to select the economically better alternative. d. The company should select the do-nothing alternative