Suppose Your Firm Is Considering Two Mutually Exclusive, Required Projects

question 26

Multiple Choice

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and three years, respectively.
$$\begin{array}{l}\begin{array} {| l | l | l | l | l | }\hline\text {Time: }&0&1&2&3\\\hline\text {Project A Cash flow:}&-20,000&10,000&30,000&1,000\\\hline\text {Project b Cash flow:}&-30,000&10,000&20,000&50,000\\\hline\end{array}\end{array}$$
Use the IRR decision rule to evaluate these projects; which one(s) should be accepted or rejected?

• A) Accept both A and B
• B) Accept neither A nor B
• C) Accept A, reject B
• D) Reject A, accept B

---

Definitions:

Refugee

A person forced to flee their country due to persecution, war, or violence.

Foreign Born

Individuals who were born outside of the country they currently reside in, regardless of their current citizenship or nationality.

Native-born Classmates

Individuals born in the country they currently reside in, as referenced in the context of an educational setting alongside others who may be immigrants or international students.

Academic Achievement

The extent to which a student has attained their short or long-term educational goals.