When Two or More Mutually Exclusive Alternative Investments Have Unequal

question 13

Multiple Choice

When two or more mutually exclusive alternative investments have unequal ____, neither the net present value nor the internal rate of return method yields reliable accept-reject information unless the projects are evaluated for an equal period of time.

• A) lives
• B) net cash flows
• C) net investments
• D) None of these are correct

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Definitions:

A Discount

A reduction applied to the normal selling price of a product or service, typically used as a promotional strategy or to incentivize early payment.

Yield

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost.

Bond Interest Expense

The cost associated with borrowing funds through the issuance of bonds, representing the interest payments made to bondholders.

Discount

A reduction in the price of goods or services, often to attract consumers or to reward volume purchases.