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:

Tariff

A tax imposed by a government on goods and services imported into a country, typically used to protect domestic industries.

Imported

Goods or services brought into a country from abroad for sale, contrasting with domestic products or services.

Producer Surplus

The discrepancy between what sellers are prepared to accept for a product or service and the actual amount they end up receiving.

Trade

The exchange of goods, services, or both between two or more parties across different geographies or markets.