You Are Considering Two Mutually Exclusive Projects with the Following

question 287

Multiple Choice

You are considering two mutually exclusive projects with the following cash flows. Which project(s) should you accept if the discount rate is 7 percent? What if the discount rate is 10 percent?

• A) Accept project A as it always has the higher NPV.
• B) Accept project B as it always has the higher NPV.
• C) Accept A at 7 percent and B at 10 percent.
• D) Accept B at 7 percent and A at 10 percent.
• E) Accept A at 7 percent and neither at 10 percent.

Describe and apply the decision-making process in management accounting contexts.

Understand the differences between qualitative and quantitative characteristics and their impacts on decision-making processes.

Identify and classify decisions as either tactical or strategic.

Recognize the types of costs relevant to decision making, including sunk costs, opportunity costs, and joint costs.

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Definitions:

Structural Unemployment

A form of unemployment caused by a mismatch between the jobs available and the skill levels of the unemployed, often due to technological changes or shifts in the economy.

Frictional Unemployment

Short-term unemployment occurring when individuals are between jobs or are seeking their first jobs.

Prosperity Phase

A period in the business cycle characterized by economic growth, high employment, and rising incomes.

Three-Phase Cycle

A conceptual model describing the three stages of economic cycles: expansion, peak, and recession.