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Conflicts Between Two Mutually Exclusive Projects Occasionally Occur,where the NPV

question 61

True/False

Conflicts between two mutually exclusive projects occasionally occur,where the NPV method ranks one project higher but the IRR method puts the other one first.In theory,such conflicts should be resolved in favor of the project with the higher IRR.

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Definitions:

Total Revenues

The gross income generated by a business through its sales activities, prior to the deduction of any operating expenses.

Average Variable Cost

The variable cost of production divided by the quantity of output produced, indicating the variable cost on a per-unit basis.

Economic Profit

The financial discrepancy that arises from subtracting a business's comprehensive expenditures, including direct and indirect costs, from its total income.

Short Run

A time period in economics during which at least one input is fixed and cannot be changed by the firm.

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