Which of the following were listed as potential Problems or Issues associated with Using a Rate of Return Approach to justifying single or multiple Mutually Exclusive projects? Note: This is a Multiple Answer question. Please select all the following options you think are correct? O The ROR calculations are typically more complex than the PW, AW, or FW methods and frequently require the use of trial and error techniques. O You cannot rely on the best Mutually Exclusive project to have the highest ROR. O An incremental approach is required to reliably determine the best project when comparing multiple Mutually Exclusive projects with the ROR approach. OThis method assumes that any net positive cash flows are reinvested at the ROR rate. If the ROR rate is substantially larger than MARR. this might not be a realistic assumption. For any sequence of Net Cash Flows with more than one sign chance over the life of the project there may be more than one ROR value that satisfies the Rate of Return definition.

Which of the following were listed as potential Problems or Issues associated with Using a Rate of Return Approach to justifying single or multiple Mutually Exclusive projects? Note: This is a Multiple Answer question. Please select all the following options you think are correct? O The ROR calculations are typically more complex than the PW, AW, or FW methods and frequently require the use of trial and error techniques. O You cannot rely on the best Mutually Exclusive project to have the highest ROR. O An incremental approach is required to reliably determine the best project when comparing multiple Mutually Exclusive projects with the ROR approach. OThis method assumes that any net positive cash flows are reinvested at the ROR rate. If the ROR rate is substantially larger than MARR. this might not be a realistic assumption. For any sequence of Net Cash Flows with more than one sign chance over the life of the project there may be more than one ROR value that satisfies the Rate of Return definition.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 4Q

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Similar questions

c) Mr. Tim, the recently hired manager for this potential project is not convinced that using the IRR is sufficient to assess the project’s viability. Calculate the Modified Internal Rate of Return (MIRR) that should be used. d) Based off this MIRR, should the project be accepted? Explain why.
The following information on two mutually exclusive projects is given below: Which of the following statements is correct?(a) Since the two projects have the same rate of return, they are indifferent.(b) Project A would be a better choice because the required investment is smaller with the same rate of return.(c) Project B would be a better choice as long as the investor's MARR is lessthan 25%.(d) Project Bis a better choice regardless of the investor's MARR.
Which of the following statements is false? The different lives 'problem' in the constant chain of replacement model arises only for independent projects. The constant chain of replacement model assumes that the incumbent machines and their replacements are absolutely identical. None of the given options is false. The constant chain of replacement assumption may be used to evaluate projects of unequal lives.
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Many times, project decision makers do not rely solely on financialhurdles, such as return on investment or internal rates of return, butplace a lot of emphasis on intangible factors. Which are the salient in-tangible factors associated with selecting one of the three options forthe spa?
When faced with a set of independent projects, one should select (choose the best answer) A. all projects with a positive NPV or an IRR greater than the hurdle rate or a PI greater than one. B. all projects with a PI greater than one. C. all projects with an IRR greater than the hurdle rate D. all projects with a positive NPV or an IRR greater than the hurdle rate. E. all projects with a positive NPV or a PI greater than the one. F. all projects with a positive NPV G. all projects with an IRR greater than the hurdle rate or a Pl greater than one.
When faced with a set of independent projects, one should select (choose the best answer) a. all projects with a positive NPV or an IRR greater than the hurdle rate or a PI greater than one. b. all projects with a positive NPV or an IRR greater than the hurdle rate. c. all projects with an IRR greater than the hurdle rate d. all projects with an IRR greater than the hurdle rate or a PI greater than one. e. all projects with a positive NPV f. all projects with a positive NPV or a PI greater than the one. g. all projects with a PI greater than one.
If a particular project has multiples rates of return (i.e., multiple values of IRR), it means that the project is economically more attractive as compared with a project with a single IRR. Group of answer choices True False
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