Suppose Your Firm Is Considering Two Mutually Exclusive, Required Projects

question 2

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 NPV 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

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Definitions:

Reflective Turning Point

Event that signals a change in the way a relationship is defined.

Proposes

Suggests something for consideration or action.

Social Penetration Model

A model of the self that reflects both the breadth and depth of information that can potentially be disclosed.

Self-Disclosure

Purposefully providing information about yourself to others that they would not learn if you did not tell them.