When comparing two projects with different lives, why do you compute an annuity with an equivalent present value (PV) to the net present value (NPV)?
A) so that you can see which project has the greatest net present value (NPV)
B) so that the projects can be compared on their cost or value created per year
C) to reduce the danger that changes in the estimate of the discount rate will lead to choosing the project with a shorter timeframe
D) to ensure that cash flows from the project with a longer life that occur after the project with the shorter life has ended are considered
Answer: B
You might also like to view...
Color rendition has an effect on the appearance of surfaces within a building. Restaurants should have lamps in their dining areas that give off light in _____ frequencies
a. black and brown b. white of bluish c. green and yellow d. red and orange
If the federal government has chosen not to regulate an area of commerce despite possessing the Commerce Clause powers to regulate it, the area is subject to Dormant Commerce Clause
Indicate whether the statement is true or false