Which Mutually Exclusive Project Would You Select, If Both Are

question 76

Multiple Choice

Which mutually exclusive project would you select, if both are priced at $1,000 and your discount rate is 15 percent; Project A with three annual cash flows of $1,000, or Project B, with three years of zero cash flow followed by three years of $1,500 annually?

• A)Project A
• B)Project B
• C)You are indifferent since the NPVs are equal
• D)Neither project should be selected

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Definitions:

Missing Value

An absent data point or piece of information that was not recorded or is unknown in a dataset or equation.

Scheduled Payments

Regular, predetermined payments made over a period of time in relation to debts or loans.

Economically Equivalent

Situations, assets, or investments that have the same economic value or impact despite being in different forms or structures.

Replacement Payment

A replacement payment is a sum paid to compensate for a loss or replacing a missed payment or asset.