Nast Inc Is Considering Projects S and L, Whose Cash Flows

question 108

Multiple Choice

Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost.

• A) $24.71
• B) $27.46
• C) $30.51
• D) $33.90

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Definitions:

Nash Equilibrium

A concept within game theory where each player's strategy is optimal, given the strategies of other players, and no player has anything to gain by changing their own strategy alone.

Dominant Strategy

A strategy in a game theory context that is best for a player regardless of what strategies other players choose.

Nash Equilibria

Situations in a strategic game where no player can benefit by changing their strategy while the other players keep theirs unchanged.

Stable

In an economic context, it refers to a situation or condition that is not significantly changing or is predictable and thus not subject to rapid fluctuations.