Carlyle Inc

question 48

Multiple Choice

Carlyle Inc. is considering two mutually exclusive projects. Both require an initial investment of $15,000 at t = 0. Project S has an expected life of 2 years with after-tax cash inflows of $7,000 and $12,000 at the end of Years 1 and 2, respectively. Project L has an expected life of 4 years with after-tax cash inflows of $5,200 at the end of each of the next 4 years. Each project has a WACC of 9.00%, and neither can be repeated. The controller prefers Project S, but the CFO prefers Project L. How much value will the firm gain or lose if Project L is selected over Project S, i.e., what is the value of NPVL - NPVS?

• A) $262.74
• B) $291.93
• C) $324.37
• D) $356.80
• E) $392.48

---

Definitions:

Courses Flourish

The expansion or significant growth of educational or training programs in various fields of study.

1970s

A decade characterized by significant social, political, and cultural changes, often remembered for its music, fashion, and movements for civil rights.

1930s

A decade characterized by the aftermath of the Great Depression, leading to significant economic, political, and social changes worldwide.

1950s

A decade from 1950 to 1959 characterized by post-war prosperity, the beginning of the Cold War, and cultural shifts in music, fashion, and technology.