Use the Table for the Question(s)below

question 55

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects with cash flows in $:
-Assume that projects Alpha and Beta are mutually exclusive.The correct investment decision and the best rationale for that decision is to:

• A)invest in project Beta since NPVBeta > 0.
• B)invest in project Alpha since NPVBeta < NPVAlpha.
• C)invest in project Beta since IRRB > IRRA.
• D)invest in project Beta since NPVBeta > NPVAlpha > 0.

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Definitions:

Consumer's Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount they actually pay.

Earplugs

Small devices inserted into the ear canal to protect the ears from loud noises, water, or to block out sound for concentration or sleep.

Utility Function

Mathematical model that quantifies satisfaction levels consumers receive from consuming various quantities of goods and services, guiding choices under constraint.

Consumer's Surplus

The gap between what consumers are prepared and capable of spending for a product or service and the aggregate sum they end up paying.