When Choosing Between Projects,an Alternative to Comparing Their IRRs Is

question 21

Multiple Choice

When choosing between projects,an alternative to comparing their IRRs is:

• A)to compute the incremental IRR,which tells us the discount rate at which it becomes profitable to switch from one project to the other.
• B)to compute the incremental payback period,which tells us the number of years during which it becomes profitable to switch from one project to the other.
• C)to compute the incremental NPV,which tells us the discount rate at which it becomes profitable to switch from one project to the other.
• D)There is no alternative selection criterion to comparing IRRs.

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Definitions:

GDP

stands for Gross Domestic Product, a measure of a nation's total economic output and a key indicator of economic health.

NAFTA

The North American Free Trade Agreement, a treaty between the United States, Canada, and Mexico that eliminated most tariffs on trade between them.

GDP

Gross Domestic Product, a measure of the economic performance of a country, calculated as the total value of all goods and services produced over a specific time period.

Protectionism

An economic policy of restricting imports from other countries through methods such as tariffs and quotas to protect domestic industries.