EVALUATION OF SINGLE PROJECT

Question 1

five methods for
evaluatingthe economic profitability of a single proposed problem solution.

Answer 1

Present Worth (PW), Future Worth (FW), Annual
Worth (AW), Rate of Return (ROR), Payback Period

Question 2

a measure of the effectiveness of an investment of
capital. It is a financial efficiency.

Answer 2

Rate of return

Question 3

interest on the original investment (sometimes called
minimum required profit) is included as a cost.

Answer 3

Annual Worth
Method

Question 4

Present Worth
Method

Answer 4

This pattern for economy studies is based on the concept of present worth.

Question 5

If the present worth of the net cash flows is equal to, or greater than zero,
the project is

Answer 5

justified economically.

Question 6

exactly comparable to the
present worth method except that all cash inflows and outflows are
compounded forward to a reference point in time called the future.

Answer 6

Future Worth
Method

Question 7

If the future worth of the net cash flow is equal to, or greater then zero, the project is

Answer 7

justified economically.

Question 8

is commonly defined as the length of time required to recover the first cost of an investment from the net cash flow produced by that investment for an interest rate of zero.

Answer 8

Payback Period