Flint Fruits Is Considering Two Equally Risky, Mutually Exclusive Projects

question 47

Multiple Choice

Flint Fruits is considering two equally risky, mutually exclusive projects, Projects A and B, that have the following cash flows: At what WACC would the two projects have the same NPV?

• A) 9.56%
• B) 10.33%
• C) 11.21%
• D) 12.55%

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Definitions:

Office Facilities

Spaces and related services necessary for a business to function, including buildings, equipment, and utilities.

Selling

The process of persuading someone to buy a product or service.

Administrative Expense

Costs related to the general operation of a company that are not directly tied to a specific business activity, such as salaries of executive personnel, office supplies, and utilities.

Direct Materials

Raw materials that are directly incorporated into a finished product and can be directly attributed to the product manufacturing process.