The Final Decision on Which One of Two Mutually Exclusive

question 402

Multiple Choice

The final decision on which one of two mutually exclusive projects to accept ultimately depends upon the:

• A) Initial cost of each project.
• B) Required discount rate.
• C) Total cash inflows of each project.
• D) Assigned payback period of each project.
• E) Length of each project's life.

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Definitions:

Financial Benefit

Any form of economic gain received, including income, dividends, or an increase in asset value.

Unforeseen Difficulties

Challenges or problems that were not anticipated or expected at the outset of a project or agreement.

Preexisting Duty Rule

A legal doctrine stating that a promise to perform something the promisor is already legally obligated to do is not consideration for a new contract.

Adequacy of Consideration

Pertains to the fairness of the value exchanged in a contractual agreement, often examined in legal disputes over contract validity.