Projects a and B Are Mutually Exclusive

question 112

Multiple Choice

Projects A and B are mutually exclusive. Project A costs $10,000 and is expected to generate cash inflows of $4,000 for four years. Project B costs $10,000 and is expected to generate a single cash flow in year 4 of $20,000. The cost of capital is 12 percent. Which project would you accept and why?

• A) Project B because it has the higher NPV
• B) Project B because it has the higher IRR
• C) Project A because it has the higher NPV
• D) Project A because it has the higher IRR

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Definitions:

Negative Impact

Refers to the adverse outcomes or dangerous effects resulting from an action, process, or event.

Environment

The surroundings or conditions in which a person, animal, or plant lives or operates, encompassing both natural and built elements.

Project Team

A group of individuals assembled to work on a project with a specific goal and timeline, often bringing together diverse skills and expertise.

Leader-Centered Group

A structured group dynamic where decision-making and guidance are predominantly under the direction of one individual or leader.