Use the Table for the Question(s)below

question 65

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.Which of the following statements is true regarding the investment decision tools' suitability for deciding between projects Alpha & Beta?

• A)The incremental IRR should not be used since the projects have different lives.
• B)The incremental IRR should not be used since the projects have different discount rates.
• C)The incremental IRR should not be used since the projects have different cash flow patterns.
• D)Both the NPV and incremental IRR approaches are appropriate to solve this problem.

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Definitions:

Mutual Funds

Investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities.

Corporate America

A term often referring to the United States' major business corporations and their practices, influence on the economy, and role in society.

Diverse Stock Portfolio

An investment strategy that involves holding a variety of different stocks to reduce risk.

Small Investors

Small investors refer to individual or retail investors who invest smaller amounts of money in securities, often lacking the market influence of larger institutional investors.