A Firm Is Considering Two Mutually Exclusive Projects with the Following

question 113

Multiple Choice

A firm is considering two mutually exclusive projects with the following cash flows: $$\begin{array} { l r r } & \text { Project X } & \text { Project Y } \\\text { Year 1 } & \$ 40,000 & \$ 120,000 \\\text { Year 2 } & 80,000 & 80,000 \\\text { Year 3 } & 120,000 & 40,000\end{array}$$ Each project requires an investment of $100,000. The cost of capital is 10 percent. Which project will have the higher net present value?

• A)Project X
• B)Project Y
• C)Project X and Project Y will have the same net present value.
• D)It is not possible to answer the question based upon the information provided.

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Definitions:

Departmentation

Departmentation refers to the process of dividing an organization into distinct units, departments, or sections, each responsible for different functions or tasks, to enhance efficiency and management effectiveness.

Organic

Pertaining to or characterized by a natural, flexible, and adaptive approach to organization and management, often in contrast to more structured or hierarchical methods.

Matrix Structure

An organizational design in which employees report to multiple managers, typically combining functional and project or product-based structures.

Inter-role Conflict

A psychological stressor that occurs when the demands of multiple roles are incompatible, causing conflict between them.