You Are Going to Choose Between Two Investments

question 51

Multiple Choice

You are going to choose between two investments. Both cost $80,000, but investment A pays $35,000 a year for four years while investment B pays $30,000 a year for five years. If your
Required return is 13%, which should you choose?

• A) A, because the pays back sooner.
• B) A, because the IRR exceeds 13%.
• C) A, because the project has a higher IRR.
• D) B, because the IRR exceeds 13%.
• E) B, because it has a higher NPV.

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Definitions:

Time Urgency

A feeling of pressure to complete tasks and meet deadlines quickly, often associated with stress and a hallmark of Type A personality traits.

Belief System

A set of principles or tenets that form the foundation of a person's understanding of the world, guiding behavior and thought.

General Adaptation Syndrome

A theoretical framework describing the body's short-term and long-term reactions to stress, proposed by Hans Selye.

Disease Of Adaptation

A concept referring to the adverse health effects that occur as a result of the body's efforts to cope with stress.