Quorex Is Evaluating Two Mutually Exclusive Projects

question 7

Multiple Choice

Quorex is evaluating two mutually exclusive projects.Project A has a net investment of $48,000 and net cash flows over a six year period of $12,500 per year.Project B also has a net investment of $48,000 but its net cash flows of $8,640 per year will occur over a 12 year period.If Quorex has a cost of capital of 14% for these projects, which project, if either, should be chosen and what is its NPV?

• A)A, $862
• B)A, $1,800
• C)B, $2,475
• D)B, $902

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Definitions:

Progressed

Progressed denotes the advancement or forward movement towards achieving a goal or improving in a certain aspect.

Defined

Clearly characterized or delineated; having a clear description or boundary.

Blended Families

A family structure comprising of parents and their children from previous relationships together with any children they may have together.

Functionalism

A theoretical perspective in sociology and anthropology that explains social institutions and their roles in maintaining or disrupting social order.