In cash flow analysis, the two projects are compared by using common life, is classified as _________?
Correct answer: D. Both B and C
- A. transaction approach
- B. replacement chain approach
- C. common life approach
- D. Both B and C
Explanation
The replacement chain approach repeats projects with unequal lives until they reach a common comparison period. It is also called the common-life approach, so both options B and C describe the method.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
Other factors held constant, but the lesser project liquidity is because of __________?
In capital budgeting, an internal rate of return of the project is classified as its __________?
In independent projects evaluation, the results of internal rate of return and net present value lead to __________?
An uncovered cost at the start of year is divided by full cash flow during recovery year then added in prior years to full recovery for calculating ____________?
In capital budgeting, the positive net present value results in _________?
An uncovered cost at start of year is $200, full cash flow during recovery year is $400 and prior years to full recovery is 3 then payback would be ________?