alleryStart learning →The equivalent annuity method divides the NPV by what to annualize it?
Athe number of years only
Bthe project's payback period
Cthe total initial outlay
Dthe present value annuity factor
Answer & Solution
Correct answer: D. the present value annuity factor
Dividing NPV by the annuity factor converts the lump sum value into an equal yearly cash flow.
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The same return received later gives an IRR that is:If cash flows are random variables, as in a life annuity, IRR uses their:The AIRR approach of Magni was introduced to solve problems of:In personal finance the IRR measures what type of performance?With no capital constraint, which projects does a firm accept to maximize value?Mutually exclusive projects are those from which:The equivalent annuity method is often used to compare projects of:To maximize return, projects are ranked in order of: