Markman & Sons Is Considering Projects S and L A) $547
B) $6

question 87

Multiple Choice

Markman & Sons is considering Projects S and L.These projects are mutually exclusive,equally risky,and not repeatable and their cash flows are shown below.If the decision is made by choosing the project with the higher IRR,how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the project with the higher IRR will also have the higher NPV,i.e.,no conflict will exist. $$\begin{array} { l c c c c c } \text { WACC: } & 10.00 \% \\\text { Year: }&0& 1 & 2 & 3 & 4 \\\hline \text { CFS }& -\$ 1,025 & \$ 650 & \$ 450 & \$ 250 & \$ 50 \\\text { CFL }& - \$ 1,025 & \$ 100 & \$ 300 & \$ 500 & \$ 700\end{array}$$

• A) $5.47
• B) $6.02
• C) $6.62
• D) $7.29
• E) $7.82

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Definitions:

Takt Time

The rate at which a product needs to be completed to meet customer demand, calculated as the available production time divided by customer demand.

DLP Assemblies

Refers to digital light processing technology components, typically used in projectors or 3D printing, which use digital micro-mirrors to direct light and create images or structures.

Productive Work

Tasks or activities that directly contribute to creating value or achieving the objectives of an organization or project.

Projection Systems

Methods and equipment used to display visual content on a surface, typically for presentations or entertainment purposes.