You Are Considering the Following Two Mutually Exclusive Projects with the Following

question 118

Multiple Choice

You are considering the following two mutually exclusive projects with the following cash flows. Both projects will be depreciated using straight-line depreciation to a zero book value over the life
Of the project. Neither project has any salvage value. You should accept Project _____ because its internal rate of return (IRR) is _____ percent.

• A) A; 13.22
• B) A; 14.67
• C) B; 13.92
• D) B; 17.79
• E) The IRR should not be used to determine which of these projects should be accepted.

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Definitions:

Process Costing

A pricing approach applied in production settings, where expenses are allocated to specific processes or departments, ideal for uniform products.

Ending Work

Refers to the final stages of a project or the remaining inventory in production at the end of an accounting period.

Inventory

The raw materials, work-in-process goods, and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

Cost System

A method used by businesses to track, record, and analyze costs associated with production or services.