Projects a and B Are Mutually Exclusive and Have Normal

question 17

Multiple Choice

Projects A and B are mutually exclusive and have normal cash flows.Project A has an IRR of 15% and B's IRR is 20%.The company's cost of capital is 12%, and at that rate Project A has the higher NPV.Which of the following statements is CORRECT?

• A) Assuming the timing pattern of the two projects' cash flows is the same, Project B probably has a higher cost (and larger scale).
• B) Assuming the two projects have the same scale, Project B probably has a faster payback than Project A.
• C) The crossover rate for the two projects must be 12%.
• D) Since B has the higher IRR, then it must also have the higher NPV if the crossover rate is less than the cost of capital of 12%.
• E) The crossover rate for the two projects must be less than 12%.

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Definitions:

Acetylcholine

A neurotransmitter in both the central and peripheral nervous systems that plays a critical role in the activation of muscle action, learning, and memory.

Inhibitory

Refers to a process that restrains or suppresses the activity of a biological function or neural pathway.

Excitatory

Relating to or causing excitation, often in the context of neurotransmitters that stimulate nerve cells to initiate or increase activity.

Somatic Nervous System

The division of the peripheral nervous system that connects the central nervous system with sensory receptors, skeletal muscles, and the surface of the body.