1. A project with MARR greater or equal to zero is considered economically
True. – this is because an MARR greater than one shows a profitable project, while
zero MARR shows an even project – benefits equal to costs.
2. Some factors are used to determine the minimum attractive rate of return
The amount of money available for investment, and the sources and
costs of the funds
ii. The number of good projects available for investment and their purpose
iii. The amount of perceived risk associated with investment opportunities
available to the firm and the estimated cost of administering projects
over a planning horizon.
Answer: (e) I and III only – II cannot be used since MARR applies to all projects,
good or bad
3. Five independent projects consisting of reinforcing dams, leeves and
embarkments are available fro funding by certain public agency. The following
tabulation shows the equivalent annual benefits and costs for each. Which
projects are the best, and the worst respectively? Use benefit-cost ratio.
Annual benefits Annual costs