Projects S and L Are Equally Risky, Mutually Exclusive, and Have

question 20

Multiple Choice

Projects S and L are equally risky, mutually exclusive, and have normal cash flows.Project S has an IRR of 15%, while Project L's IRR is 12%.The two projects have the same NPV when the cost of capital is 7%.Which of the following statements is CORRECT?

• A) If the cost of capital is 6%, Project S will have the higher NPV.
• B) If the cost of capital is 13%, Project S will have the lower NPV.
• C) If the cost of capital is 10%, both projects will have a negative NPV.
• D) Project S's NPV is more sensitive to changes in cost of capital than Project L's.
• E) If the cost of capital is 10%, both projects will have positive NPVs.

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Definitions:

Broad-based Organizational Change

A comprehensive transformation in an organization covering major aspects like culture, systems, processes, and structure, aiming at improving overall performance and adaptability.

Teamwork Role

The specific duties or functions that an individual assumes or is assigned within a team to contribute effectively to the team's goals.

Complementary Skills

Abilities or expertise in different areas that, when combined, enhance performance, productivity, or innovation in a team or project.

Mutually Accountable

A situation or relationship in which all parties involved accept responsibility for their actions and contributions toward a common goal.