Two Mutually Exclusive Projects Each Have a Cost of $10,000

question 74

Multiple Choice

Two mutually exclusive projects each have a cost of $10,000.The total, undiscounted cash flows from Project L are $15,000, while the undiscounted cash flows from Project S total $13,000.Their NPV profiles cross at a discount rate of 10 percent.Which of the following statements best describes this situation?

• A)The NPV and IRR methods will select the same project if the required rate of return is greater than 10 percent; for example, 18 percent.
• B)The NPV and IRR methods will select the same project if the cost of capital is less than 10 percent; for example, 8 percent.
• C)To determine if a ranking conflict will occur between the two projects the required rate of return is needed as well as an additional piece of information.
• D)Project L should be selected at any required rate of return, because it has a higher IRR.
• E)Project S should be selected at any required rate of return, because it has a higher IRR.

Understand how to calculate cost of goods sold (COGS) from manufacturing data.

Differentiate between manufacturing and non-manufacturing costs.

Calculate raw materials used in production and total manufacturing costs from given data.

Understand the classification of labor costs into direct labor and indirect labor (manufacturing overhead).

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Definitions:

External Cause

Any factor or event originating outside an individual that significantly affects behaviors, outcomes, or circumstances.

Internal Cause

Factors within a person, such as traits, beliefs, or desires, that lead to their behavior or actions.

Literature Class

An academic course focusing on the study, analysis, and interpretation of written works, such as poems, novels, and plays.

Internal Factors

Elements within an organization or individual that influence behavior, decision-making, or performance, such as personality, motivation, or corporate culture.