Mulroney Corp

question 23

Multiple Choice

Mulroney Corp. is considering two mutually exclusive projects. Both require an initial investment of $10,000 at t = 0. Project X has an expected life of 2 years with after-tax cash inflows of $6,000 and $7,900 at the end of Years 1 and 2, respectively. In addition, Project X can be repeated at the end of Year 2 with no changes in its cash flows. Project Y has an expected life of 4 years with after-tax cash inflows of $4,300 at the end of each of the next 4 years. Each project has a WACC of 8%. Using the replacement chain approach, what is the NPV of the most profitable project?

• A) $4,242
• B) $4,246
• C) $4,286
• D) $4,325
• E) $4,433

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Definitions:

Processed

Refers to information, materials, or data that has been analyzed, manipulated, or modified in some manner.

Attended To

Focused on or paid special attention to; involves the allocation of cognitive resources towards specific stimuli or tasks.

Dichotic Listening Task

An experimental task used in psychology to study selective attention and the lateralization of brain function, involving presenting two different auditory messages simultaneously, one to each ear.