The total-cost approach and the incremental-cost approach to evaluating two competing investment opportunities:
A) are dissimilar in that one deals with net present value and the other deals with internal rate of return.
B) are similar in that they will recommend the same alternative as the best.
C) are dissimilar in that one uses the cost of capital as a discount rate and the other does not.
D) are similar in that neither considers the time value of money.

Question

Quizplus · Accepted Answer

Both approaches will recommend the same alternative as the best because they ultimately evaluate the same financial outcomes, just from different perspectives.

The Total-Cost Approach and the Incremental-Cost Approach to Evaluating Two