Projects C and D Both Have Normal Cash Flows and Are

question 62

Multiple Choice

Projects C and D both have normal cash flows and are mutually exclusive.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 is probably larger in scale than Project C.
• B) Project C probably has a faster payback.
• C) Project C probably has a higher IRR.
• D) The crossover rate between the two projects is below 12%.
• E) Project D probably has a higher IRR.

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Definitions:

Ingestion

The act of taking substances, typically food or medication, into the body through the mouth for digestion.

Chemical Burn

Tissue damage caused by exposure to a corrosive substance, which can affect the skin and mucous membranes.

Acids

Chemical substances that release hydrogen ions when dissolved in water, exhibiting a sour taste and capable of turning blue litmus paper red.

Wound

An injury to living tissue, especially an injury involving a cut or break in the skin.