You Are Considering the Following Two Mutually Exclusive Projects That $11.25 \%$

question 106

Multiple Choice

You are considering the following two mutually exclusive projects that will not be repeated. The required rate of return is $11.25 \%$ for project $A$ and $10.75 \%$ for project $B$ . Which project should you accept and why?

• A)project A; because its NPV is about £335 more than the NPV of project B.
• B)project A; because it has the higher required rate of return.
• C)project B; because it has the largest total cash inflow.
• D)project B; because it returns all its cash flows within two years.
• E)project B; because it is the largest sized project.

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Definitions:

Frictional Unemployment

A type of unemployment that occurs when workers are between jobs, either because they are searching for new positions or are transitioning from one job to another.

Full Employment

A condition where every available work resource is employed in the most financially efficient method.

Labor Force Entrants

Individuals who are entering the workforce for the first time or after an absence, contributing to the available labor supply.

Real GDP

Gross Domestic Product adjusted for inflation, which accurately reflects the value of goods and services produced by an economy.