Carolina Company Is Considering Projects S and L,whose Cash Flows

question 76

Multiple Choice

Carolina Company is considering Projects S and L,whose cash flows are shown below.These projects are mutually exclusive,equally risky,and are not repeatable.If the decision is made by choosing the project with the higher IRR,how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost. $\begin{array}{lccccc}\text { WACC: } & 7.75 \% \\\text { Year } & 0 & 1 & 2 & 3 & 4 \\\mathrm{CF}_{\mathrm{S}} & -\$ 1,050 & \$ 675 & \$ 650 & & \\\mathrm{CF}_{\mathrm{L}} & -\$ 1,050 & \$ 360 & \$ 360 & \$ 360 & \$ 360\end{array}$

• A) $11.45
• B) $12.72
• C) $14.63
• D) $16.82
• E) $19.35

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Definitions:

Attribution Theory

A theory focused on how individuals interpret and assign causes to others' behavior and their own.

Dispositional Attributions

Explaining someone's behavior by attributing it to their personality or character rather than to external factors.

Situational Factors

Refer to external influences that can impact an individual's behavior and decisions in a given context.

Achievement Attribution

The process of ascribing success or failure to personal or external factors.