Question

In evaluating independent projects, no incremental analysis is necessary between projects. Each project is evaluated separately from others, and more than one project can be selected. Therefore, the only comparison is with the do-nothing alternative for each project.
True or False?

Answer 1

TRUE

Explanation:

The correct answer is true as the independent projects are selected based on the net present worth and the rate of return and do nothing alternative. In the independent projects, there is no need for the incremental B/C analysis. Simple B/C ratio will do it. If the B/C > 1, benefits outweigh the costs and the project is selected provided that there is no budget limitation. Thus, the given statement is absolutely the true one.