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The two ratio conventions give different numerical values but the same

  • A.value of the ratio at unity
  • B.estimate of the net benefit
  • C.accept-or-reject decision
  • D.ranking among all alternatives

Answer: C

Correct answer: accept-or-reject decision

Both conventions cross unity at exactly the point where net present worth crosses zero, since \( B - D > C \) and \( B > C + D \) are the same inequality rearranged. The numerical values differ and so may rankings, but whether a project passes does not depend on which form was used.

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