Question

A company is considering two investment projects. If they use the total project approach and the differential approach, both approaches produce ________.

a. different answers
b. similar answers
c. the same answer
d. not enough information is given to make an assessment

Answer 1

Answer:

d

Explanation:

The question needs more detail to be answered...at least by me:-(

Answer 2

The correct answer is:

c. the same answer

Explanation:

The total project approach compares the NPVs of the total cash flows from each project, while the differential approach computes the NPV of the difference in cash flows between two projects. Both produce the same results when there are two alternatives.