Project Selection Methods Flashcards
What should be done to a project if its NPV is less than zero?
Reject the project
What should be done to a project if its NPV is equal to or more than zero?
Accept the project
Which method uses “time value of money” to appraise long-term projects?
Net Present Value (NPV)
Among three projects with low, medium and high opportunity costs, which project is most attractive?
Project with the lowest opportunity cost is the most attractive.
What are the two categories of project selection methods?
- Benefit Measurement
- Constrained Optimization
How do Benefit Measurement methods of project selection work?
They compare the projects based on features and benefits.
How do Constrained Optimization methods of project selection work?
They use complex mathematical models and algorithms to predict the success of the project.
What are the two main types of accelerated depreciations?
- Declining Balance - Sum of the Years Digit
What are the various Benefit Measurement methods of project selection?
- Murder Board - Peer Review - Scoring Models - Economic Models
What are the various Constrained Optimization methods of project selection?
- Linear programming - Nonlinear programming - Dynamic programming - Integer programming - Multi-objective programming
Which type of project selection method is Murder Board?
Benefit Measurement method
Which type of project selection method is Dynamic Programming?
Constrained Optimization method
Which type of project selection method uses ROI?
Benefit Measurement method
What are the various economic models of project selection?
- Present Value (PV) - Net Present Value (NPV) - Internal Rate of Return (IRR) - Return on Investment (ROI) - Payback Period - Benefit-cost Ratio
What are the two forms of depreciation?
- Straight-line - Accelerated
