Projects C and D Are Mutually Exclusive and Have Normal

question 53

Multiple Choice

Projects C and D are mutually exclusive and have normal cash flows.Project C has a higher NPV if the WACC is less than 12%,whereas Project D has a higher NPV if the WACC exceeds 12%.Which of the following statements is CORRECT?

• A) Project D probably has a higher IRR.
• B) Project D is probably larger in scale than Project C.
• C) Project C probably has a faster payback.
• D) Project C probably has a higher IRR.
• E) The crossover rate between the two projects is below 12%.

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Definitions:

Withdrawal

Unpleasant, sometimes dangerous reactions that may occur when people who use a drug regularly stop taking or reduce their dosage of the drug.

Tolerance

The adjustment that the brain and the body make to the regular use of certain drugs so that ever larger doses are needed to achieve the earlier effects.

Substance Use Disorder

A medical condition characterized by an uncontrolled use of a substance despite harmful consequences.

Barbiturates

A class of drugs used as sedatives and sleeping aids, which can be habit-forming and have been largely replaced by safer alternatives for most applications.