Question

To identify the best of mutually exclusive alternatives by the B/C ratio method, an incremental analysis...

To identify the best of mutually exclusive alternatives by the B/C ratio method, an incremental analysis is necessary.

Question 1 options:

True
False
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans: True

Explanation:

The incremental B/C ratio analysis is used to select the best alternative from a set of mutually exclusive alternatives. In incremental B/C ratio analysis method, the alternative with large cost will be selected, if the incremental benefits justify the extra cost associated with it. In other words, if the incremental B/C ratio is greater than or equal to 1, then the larger cost alternative will be selected and if incremental B/C ratio is less than 1, then lower cost alternative is selected.

When we compare mutually exclusive alternatives, the alternative with maximum B/C ratio should not be selected as the best alternative at first instance because the maximization of B/C ratio may not guarantee that, best alternative is selected.

Thus, the statement is true.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
When the mutually exclusive alternatives under consideration have only disbursements (service alternatives), the do-nothing alternative must...
When the mutually exclusive alternatives under consideration have only disbursements (service alternatives), the do-nothing alternative must be included so that a rate of return analysis can be conducted on the incremental cash flow. Question 1 options: True False
Which of the following analysis techniques require an incremental analysis for mutually exclusive projects? Question options:...
Which of the following analysis techniques require an incremental analysis for mutually exclusive projects? Question options: Present Worth and Annual Worth IRR and Annual Worth Benefit-Cost and Present Worth IRR and Benefit-Cost
The following data have been estimated for two mutually exclusive investment alternatives, A and B. Incremental...
The following data have been estimated for two mutually exclusive investment alternatives, A and B. Incremental ROR analysis was perform to select more desirable alternative. If MARR = 12%, the value of incremental cash flow for year 3 is: A B Capital Investment -8000 -13000 Annual Cash Flow -3500 -1600 Salvage Value 0 2,000 Useful life 5 5 -$1900 +$1900 -$3,500 +$3,500
Consider four mutually exclusive alternatives, each having an 8-year life: A. B. C. D. First cost:...
Consider four mutually exclusive alternatives, each having an 8-year life: A. B. C. D. First cost: $1000. $800. $600. $500 Uniform annual: 152. 120. 97. 122 Benefit Salvage value: 750. 500. 500 0 If the minimum attractive rate of return is 12%, which alternative should be selected? Use the incremental analysis method
Question 1 If the projects are independent, the AW at the MARR is calculated. All the...
Question 1 If the projects are independent, the AW at the MARR is calculated. All the projects with AW equal or greater than zero are acceptable. Question 1 options: True False Question 2 One of the cautions when using the ROR method is that is great technique only for single projects. There is an special procedure to compare multiple alternatives. Question 2 options: True False Question 3 Conventional cash flows are also known as non-simple cash flows. Question 3 options:...
For mutually exclusive projects, the incremental IRR approach to capital budgeting reconciles the IRR and NPV...
For mutually exclusive projects, the incremental IRR approach to capital budgeting reconciles the IRR and NPV methods because this approach overcomes the problems associated with multiple IRRs or no IRRs. true of false
Consider the following two mutually exclusive alternatives: A B 0 -$18,000 -$21,100 1 $7,500 $6,000 2...
Consider the following two mutually exclusive alternatives: A B 0 -$18,000 -$21,100 1 $7,500 $6,000 2 $7,800 $14,000 3 $6,650 $7,000 Determine the IRR on the incremental investment. If the firm’s MARR is 18%, which alternative is the better choice?
Consider three mutually exclusive alternatives. The MARR is 10%based on the payback period method, which alternative...
Consider three mutually exclusive alternatives. The MARR is 10%based on the payback period method, which alternative should be selected? Year             X           Y           Z 0                   -$100    -$50      -$50 1                   25          16          21 2                   25          16          21 3                   25          16          21 4                   25          16          21 Consider three mutually exclusive alternatives, each with a 20 year life span and no salvage value. The minimum attractive rate of return is 6%. A                         B                           C Initial Cost                                     $4000                 $8000                           $10,000 Uniform Annual Benefit ($)            410                    ...
For the four revenue alternatives below, use the ROR method results to answer the question below...
For the four revenue alternatives below, use the ROR method results to answer the question below Alternative Initial Investment, $ Overall ROR, i*% Δi*% When Compared with Alternative A B C A −60,000 11.7 - - - B −90,000 22.2 43.3 - - C −140,000 17.9 22.5 10.0 - D −190,000 15.8 17.8 10.0 10.0 Problem 08.034.c- Choose from more than two alternatives based on incremental ROR analysis Which one should be selected if the MARR is 10% per year...
Compare two mutually exclusive alternatives below using annual worth analysis at MARR = 10% per year....
Compare two mutually exclusive alternatives below using annual worth analysis at MARR = 10% per year. Which alternative should be selected? Alternatives Alternative 1 Alternative 2 First cost, $ -90,000 -750,000 Annual cost, $/year -50,000 -10,000 Salvage value, $ 8,000 - Life, years 5 ∞ Alternative 2 and -$85,000 Alternative 1 and -$72,450 Alternative 2 and -$72,450 Alternative 1 and -$65,000
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT