Kosovski Company Is Considering Projects S and L, Whose Cash

question 89

Multiple Choice

Kosovski Company is considering Projects S and L, whose cash flows are shown below.These projects are mutually exclusive, equally risky, and are not repeatable.If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost.
WACC: 7.75%
Year 0 1 2 3 4
CFS -$1,050 $675 $650
CFL -$1,050 $360 $360 $360 $360

• A)$11.45
• B)$12.72
• C)$14.63
• D)$16.82
• E)$19.35

---

Definitions:

Advocacy

The act of publicly recommending or supporting a particular cause or policy.

Media Richness

The degree to which a communication channel conveys information effectively, taking into account the capacity for immediate feedback, the use of multiple cues, and the personal nature of the medium.

Animation

The process of creating the illusion of motion by displaying a series of static images in rapid succession.

Technical Skill

Denotes the ability to perform tasks that require specific knowledge and capabilities, especially related to technology and specialized fields.