MARRs are: • Before-taxes with inflation = 10% • Before-taxes without inflation
ID: 2799653 • Letter: M
Question
MARRs are:
• Before-taxes with inflation = 10%
• Before-taxes without inflation (inflation-free) = 8%
• After-taxes with inflation = 5%
• After-taxes without inflation (inflation free) = 3%
1. The MARR required for the calculation of the project’s Net Present Worth (NPW) in after-tax current (actual) dollars is
a) 10%; b) 8%; c) 5%; d) 3%.
2. The MARR required for the calculation of the project’s Annual Equivalent Worth (AEW) in before-tax constant dollars is
a) 10%; b) 8%; c) 5%; d) 3%.
3. If you were the owner of this project, the MARR used to determine the project’s impact on the after-tax purchasing power of your investment would be
a) 10%; b) 8%; c) 5%; d) 3%.
Explanation / Answer
1.
The MARR required for the calculation of the project’s Net Present Worth (NPW) in after-tax current (actual) dollars is Before-taxes with inflation that is 10%.
Option (A) is correct answer.
2.
The MARR required for the calculation of the project’s Annual Equivalent Worth (AEW) in before-tax constant dollars is Before-taxes without inflation (inflation-free) that is 8%.
Option (B) is correct answer.
3.
If you were the owner of this project, the MARR used to determine the project’s impact on the after-tax purchasing power of your investment would be After-taxes without inflation (inflation free) that is 3%.
Option (D) is correct answer.
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