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

Question

Quizplus · Accepted Answer

The total project approach considers all cash flows over the life of the project while the differential approach only considers the difference in cash flows between the two projects. However, for both approaches, the decision ultimately comes down to comparing the net present value or internal rate of return of each project, which should produce the same answer regardless of the approach used. Therefore, the answer is C, the same answer.

A Company Is Considering Two Investment Projects