Normal Projects C and D Are Mutually Exclusive

question 3

Multiple Choice

Normal projects C and D are mutually exclusive. Project C has a higher net present value if the WACC is less than 12 percent, whereas Project D has a higher net present value if the WACC exceeds 12 percent. Both projects have a positive NPV if the WACC is 12 percent. Which of the following statements is most correct?

• A) Project D has a higher internal rate of return.
• B) Project D is probably larger in scale than Project C.
• C) Project C probably has a faster payback.
• D) All of the statements above are correct.
• E) Answers a and c are correct.

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Definitions:

Interpersonal Conduct

The behavior and manner in which individuals interact with each other, especially within professional contexts.

Distributive Justice

The perceived fairness of the distribution of resources and rewards among individuals within an organization or society.

Unbiased Decision Maker

An individual who makes choices and judgments that are fair, impartial, and not influenced by personal preconceptions or prejudices.

Equity Theory

A theory of motivation that focuses on individuals' perceptions of fairness in the distribution of rewards and efforts in their relationships or work environments.