A Company Is Trying to Decide Which of Two Independent

question 346

Multiple Choice

A company is trying to decide which of two independent projects they should accept. The company is concerned that the estimates provided for the projects are overly optimistic. In this case, the firm
Should:

• A) Ignore DOL, and select the highest NPV project.
• B) Consider both DOL and NPV when making the decision.
• C) Select the project with the highest accounting return.
• D) Select the project with the shortest payback period.
• E) Select the project with the lowest DOL.