Are Considering Two Mutually Exclusive, Equally Risky, Projects Both Have

question 22

Multiple Choice

are considering two mutually exclusive, equally risky, projects Both have IRRs that exceed the WACC Which of the following statements is CORRECT? Assume that the projects have normal cash flows, with one outflow followed by a series of inflows.

• A) If the cost of capital is greater than the crossover rate, then the IRR and the NPV criteria will not result in a conflict between the projects. The same project will rank higher by both criteria.
• B) If the cost of capital is less than the crossover rate, then the IRR and the NPV criteria will not result in a conflict between the projects. The same project will rank higher by both criteria.
• C) For a conflict to exist between NPV and IRR, the initial investment cost of one project must exceed the cost of the other.
• D) For a conflict to exist between NPV and IRR, one project must have an increasing stream of cash flows over time while the other has a decreasing stream. If both sets of cash flows are increasing or decreasing, then it would be impossible for a conflict to exist, even if one project is larger than the other.
• E) If the two projects' NPV profiles do not cross, then there will be a sharp conflict as to which one should be selected.

Identify the effects of technological improvements on supply.

Distinguish between movements along supply/demand curves and shifts of the curves.

Recognize the impact of input costs on the supply of products.

Analyze the effect of changes in supply and demand on equilibrium price.

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Definitions:

Change-Oriented

Reflecting an approach or attitude that emphasizes the importance of adaptation and seeks to embrace or induce change.

Bolstering

The act of supporting or strengthening.

Self-Esteem

The confidence and sense of respect one has for themselves; self-worth.

Supportive Leadership

A leadership style that focuses on building trust, respect, and empathy with team members while encouraging their development and well-being.