You Are Considering Two Mutually Exclusive,equally Risky,projects

question 29

Multiple Choice

You are considering two mutually exclusive,equally risky,projects.Both have IRRs that exceed the WACC.Which of the following statements is CORRECT? Assume that the projects have normal cash flows,with one outflow followed by a series of inflows.

• A) If the cost of capital is greater than the crossover rate, then the IRR and the NPV criteria will not result in a conflict between the projects. The same project will rank higher by both criteria.
• B) If the cost of capital is less than the crossover rate, then the IRR and the NPV criteria will not result in a conflict between the projects. The same project will rank higher by both criteria.
• C) For a conflict to exist between NPV and IRR, the initial investment cost of one project must exceed the cost of the other.
• D) For a conflict to exist between NPV and IRR, one project must have an increasing stream of cash flows over time while the other has a decreasing stream. If both sets of cash flows are increasing or decreasing, then it would be impossible for a conflict to exist, even if one project is larger than the other.
• E) If the two projects' NPV profiles do not cross, then there will be a sharp conflict as to which one should be selected.

Understand the concept of tender as an offer of performance and its significance in contracts.

Analyze the effects of material and anticipatory breaches on contractual obligations.

Discern between different standards (subjective, objective) for contract satisfaction and their legal implications.

Recognize the role of mutual agreement (accord and satisfaction, novation, mutual rescission) in modifying or discharging contracts.

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Definitions:

Parkinson's Disease

A progressive neurological disorder characterized by motor symptoms such as tremors, stiffness, slowness of movement, and postural instability.

Forebrain

the anterior part of the brain, including the cerebral hemispheres, thalamus, and hypothalamus, responsible for sensory and associative functions.

Midbrain

A part of the brain located between the forebrain and the hindbrain, involved in functions such as vision, hearing, motor control, and alertness.

Hindbrain

The posterior part of the brain that includes the cerebellum and brainstem, responsible for regulating basic life functions.