Projects S and L Are Equally Risky,mutually Exclusive,and Have Normal

question 39

Multiple Choice

Projects S and L are equally risky,mutually exclusive,and have normal cash flows.Project S has an IRR of 15%,while Project L's IRR is 12%.The two projects have the same NPV when the WACC is 7%.Which of the following statements is CORRECT?

• A) If the WACC is 10%,both projects will have positive NPVs.
• B) If the WACC is 6%,Project S will have the higher NPV.
• C) If the WACC is 13%,Project S will have the lower NPV.
• D) If the WACC is 10%,both projects will have a negative NPV.
• E) Project S's NPV is more sensitive to changes in WACC than Project L's.

Recognize inappropriate questions for interviewers to ask.

Understand the strategic approaches to answering questions and presenting oneself in interviews.

Understand the appropriate communication strategies for various professional scenarios, including job offers, refusals, and interview follow-ups.

Identify and apply the correct writing style for specific professional messages.

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Definitions:

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that may not be collected, used to reduce the overall accounts receivable value on the balance sheet.

Adjustment

A process of altering the value of accounts to more accurately reflect their true value at the end of an accounting period.

Balance Sheet Approach

A method of estimating an allowance for doubtful accounts based on the accounts receivable's ending balance, helping to present a more accurate picture of a company's financial health.

Allowance for Doubtful Accounts

An estimate of the amount of accounts receivable that may not be collectible, recorded as a contra asset account.