Comparisons and Selection Among Alternatives

What does MARR stand for?

• Maximum Allowable Rate of Return

• Minimum Acceptable Rate of Return

• Maximum Achievable Rate of Return

• Minimum Attractive Rate of Return

What distinguishes cost alternatives from investment alternatives?

• Cost alternatives involve positive cash flows, while investment alternatives involve negative cash flows.

• Cost alternatives involve minimizing costs, while investment alternatives involve maximizing revenue.

• Cost alternatives involve negative cash flows, while investment alternatives involve positive cash flows.

• Cost alternatives involve maximizing initial capital investment, while investment alternatives involve minimizing costs.

Which decision-making tool is used to visually represent the relationship between two variables?

• Scatter plot

• Histogram

• Pie chart

• Bar graph

Which factor is NOT considered when applying the Equivalent Worth Method?

• Salvage value

• Interest rate

• Initial investment

• Project duration

If two alternatives have the same cost but different risks, which alternative would generally be preferred?

• The one with higher risk

• The one with lower risk

• Both are equally preferred

• It depends on other factors

What is the common objective when evaluating both investment and cost alternatives?

• Maximizing positive cash flows

• Minimizing initial capital investment

• Maximizing Present Worth (PW) of all cash flows

• Minimizing negative cash flows

In the Equivalent Worth Method, how are cash flows of different alternatives with equal lives compared?

• By converting them to present values

• By calculating their future worth

• By adjusting for inflation

• By discounting them to their equivalent annual worth

What does the acronym NPV stand for in decision-making processes?

• Net Present Value

• New Product Variation

• Non-Profit Venture

• Next Phase Venture

What is the primary objective of the Equivalent Worth Method when comparing MEAs with equal lives?

• To determine the present value of each alternative

• To identify the most profitable alternative

• To calculate the equivalent annual worth of each alternative

• To assess the future value of each alternative

Which of the following BEST describes the concept of opportunity cost?

• The cost of missed opportunities when choosing one alternative over another

• The cost of resources required to implement a particular alternative

• The cost of purchasing a new product or service

• The cost of labor involved in a project