Projects a and B Are Mutually Exclusive and Have Normal

question 1

Multiple Choice

Projects A and B are mutually exclusive and have normal cash flows.Project A has an IRR of 15% and B's IRR is 20%.The company's WACC is 12%,and at that rate Project A has the higher NPV.Which of the following statements is CORRECT?

• A) The crossover rate for the two projects must be less than 12%.
• B) Assuming the timing pattern of the two projects' cash flows is the same,Project B probably has a higher cost (and larger scale).
• C) Assuming the two projects have the same scale,Project B probably has a faster payback than Project A.
• D) The crossover rate for the two projects must be 12%.
• E) Since B has the higher IRR,then it must also have the higher NPV if the crossover rate is less than the WACC of 12%.

---

Definitions:

Universal Core Values

Fundamental principles or beliefs that are widely accepted and upheld across different cultures and societies.

Human Dignity

The inherent worth of all individuals, which entitles them to be treated with respect and fairness.

Corporate Culture

The shared values, beliefs, attitudes, and practices that characterize an organization and guide its employees’ behavior.

Cultural Relativism

The belief that there is no one right way to behave; ethical behaviour is determined by its cultural context.