Iron,Inc ,Which Has a Hurdle Rate of 10%,is Considering Three

question 67

Multiple Choice

Iron,Inc. ,which has a hurdle rate of 10%,is considering three different independent investment opportunities.Each project has a five-year life.The annual cash flows and initial investment for each of the projects are as follows: In what order should Iron prioritize investment in the projects?

• A)A,C,B
• B)B,C,A
• C)A,B,C
• D)B,A,C

---

Definitions:

Marginal Cost

The expense incurred from the manufacture of an additional single unit of a product or service.

Quantity Discount

A reduction in price per unit of a good or service based on the amount of the purchase, used to encourage larger orders.

Aluminum

A lightweight, silvery-white metallic element used broadly in manufacturing and construction due to its strength and corrosion resistance.

Marginal Analysis

An examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.