Use the Table for the Question(s)below

question 51

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects with cash flows in $:
-Which of the following statements is correct?

• A)You should invest in project Beta since NPVBeta > NPVAlpha.
• B)You should invest in project Alpha since IRRAlpha > IRRBeta.
• C)You should invest in project Alpha since NPVAlpha < 0.
• D)You should invest in project Beta since IRRBeta > 0.

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Definitions:

Partial Equity Method

An accounting technique used when an investing company does not have significant influence over the investee but still wants to record its investment's profit and loss proportionately.

Equity Method

An accounting technique used to record investments in associate companies where the investor has significant influence, typically reflected by owning 20%-50% of voting stock.

Acquisition Method

A set of procedures used in accounting to consolidate the financial statements of a parent company and its subsidiaries.

Consolidated Revenues

The total earnings generated by a company and its subsidiaries, reported together as a single figure.