You Are Considering the Following Two Mutually Exclusive Projects

question 24

Multiple Choice

You are considering the following two mutually exclusive projects.The required return on each project is 12 percent.Which project should you accept and what is the best reason for that decision?

• A)Project A, because it pays back faster
• B)Project A, because it has the higher internal rate of return
• C)Project B, because it has the higher internal rate of return
• D)Project A, because it has the higher net present value
• E)Project B, because it has the higher net present value

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Definitions:

Firm Offer

An offer in a contract that is expressed in a way that it cannot be revoked for a certain period of time.

Merchant

An individual or business entity engaged in the trade of goods, services, or both, to consumers.

Bilateral Contract

A mutual agreement between two parties where each promises to perform an act in exchange for the other party's act.

Valid Contract

A legally binding agreement between parties that is enforceable by law, meeting all essential elements like offer, acceptance, consideration, and mutual intent.