Deep Mining and Precious Metals Are Separate Firms That Are

question 47

Multiple Choice

Deep Mining and Precious Metals are separate firms that are both considering a silver exploration project.Deep Mining is in the actual mining business and has an aftertax cost of capital of 12.8 percent.Precious Metals is in the precious gem retail business and has an aftertax cost of capital of 10.6 percent.The project under consideration has initial costs of $575,000 and anticipated annual cash inflows of $102,000 a year for ten years.Which firm(s) ,if either,should accept this project?

• A)Company A only
• B)Company B only
• C)both Company A and Company B
• D)neither Company A or Company B
• E)cannot be determined without further information

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Definitions:

Serous Fluid

A clear, watery fluid secreted by the serous membranes, helping to lubricate and reduce friction between internal organs.

Surfactant

A substance that reduces the surface tension of fluids, often mentioned in the context of the fluid in the lungs to help them expand properly.

Cricoid Cartilage

A ring-shaped structure at the top of the trachea that provides support and structure to the airway.

Arytenoid Cartilage

A pair of small three-sided cartilages located in the larynx, to which the vocal cords are attached, playing a key role in vocalization.