You Are Considering Two Independent Projects

question 59

Multiple Choice

You are considering two independent projects. Project A has an initial cost of $125,000 and cash inflows of $46,000, $79,000, and $51,000 for Years 1 to 3, respectively. Project B costs $135,000 with expected cash inflows for Years 1 to 3 of $50,000, $30,000, and $100,000, respectively. The required return for both projects is 16 percent. Based on IRR, you should:

• A) accept both projects.
• B) accept Project A and reject Project B.
• C) accept Project B and reject Project A.
• D) reject both projects.
• E) accept either one of the projects, but not both.

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Definitions:

Crime Of Violence

An act committed against a person, property, or society that involves the use or threat of physical force.

Illegal Acts

Actions or activities that are forbidden by law and subject to legal penalties.

Mercury Preservative

A compound containing mercury used in some vaccines and medical products to prevent bacterial and fungal growth.

Vaccinate

The act of administering a vaccine to stimulate an individual's immune system to protect against specific infectious diseases.