Use the Table for the Question(s) Below -Assume That Projects Alpha and Beta Are Mutually Exclusive

question 39

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects:
$\begin{array} { l c c c c c c c c c } \hline \text { Project } & \begin{array} { c } \text { Year 0 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 1 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 2 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 3 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 4 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 5 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 6 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 7 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Discount } \\\text { Rate }\end{array} \\\hline \text { Alpha } & - 79 & 20 & 25 & 30 & 35 & 40 & \text { N/A } & \text { N/A } & 15 \% \\\hline \text { Beta } & - 80 & 25 & 25 & 25 & 25 & 25 & 25 & 25 & 16 \% \\\hline\end{array}$
-Assume that projects Alpha and Beta are mutually exclusive. The correct investment decision and the best rationale for that decision is to

• A) invest in project Alpha, since NPVBeta < NPVAlpha.
• B) invest in project Beta, since IRRB > IRRA.
• C) invest in project Beta, since NPVBeta > NPVAlpha > 0.
• D) invest in project Beta, since NPVBeta > 0.

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Definitions:

Financial Manager

A professional responsible for managing the financial health of an organization, including planning, organizing, controlling, and monitoring financial resources.

Purchases

The acquisition of goods or services by paying for them, typically for use or resale by a business.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.

Inventory Purchases

Transactions made by a company to buy goods for sale or raw materials for production, often reflecting a business's operational needs.