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

question 22

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 cost of capital 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 cost of capital is needed as well as an additional piece of information.
• D) Project L should be selected at any cost of capital, because it has a higher IRR.
• E) Project S should be selected at any cost of capital, because it has a higher IRR.

Recognize the interaction between genetics, the environment, and prenatal development.

Understand the concept of genetic-environment correlations in shaping individual characteristics and behaviors.

Describe different family structures and their impact on child development.

Recognize the impact of shared and non-shared environmental experiences on personal development.

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Definitions:

Long-Run Equilibrium

A state in which market supply equals market demand and all firms in a perfectly competitive market earn zero economic profits.

Elastic Demand

A situation in which demand for a product or service is sensitive to price changes, meaning a small change in price can lead to a significant change in quantity demanded.

Revenue Generation

The process of creating income for a business or organization through various means such as sales, services, or investments.

Lower Fares

Reduced charges for services, particularly in transportation, such as airfares or bus tickets, making travel more affordable.