Langton Inc A) $18590
B) $197

question 80

Multiple Choice

Langton Inc.is considering Projects S and L,whose cash flows are shown below.These projects are mutually exclusive,equally risky,and not repeatable.The CEO believes the IRR is the best selection criterion,while the CFO advocates the MIRR.If the decision is made by choosing the project with the higher IRR rather than the one with the higher MIRR,how much,if any,value will be forgone.In other words,what's the NPV of the chosen project versus the maximum possible NPV? Note that (1) "true value" is measured by NPV,and (2) under some conditions the choice of IRR vs.MIRR will have no effect on the value lost. $\begin{array}{lccccc}\text { WACC: } & 7.00 \% & & & \\\text { Year } & 0 & 1 & 2 & 3 & 4 \\ \mathrm{CF}_{\mathrm{S}} & -\$ 1,100 & \$ 550 & \$ 600 & \$ 100 & \$ 100 \\\mathrm{CF}_{\mathrm{L}} & -\$ 2,750 & \$ 725 & \$ 725 & \$ 800 & \$ 1,400\end{array}$

• A) $185.90
• B) $197.01
• C) $208.11
• D) $219.22
• E) $230.32

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Definitions:

Benjamin Whorf

An American linguist known for his hypothesis on the relationship between language and thought.

Emotional Experience

The process and state of encountering or undergoing feelings that result from stimuli, events, or relationships.

Prefrontal Cortex

A region of the brain located at the front of the frontal lobe, crucial for decision making, planning, and moderating social behavior.

Amygdala

A region of the brain within the temporal lobe, involved in the processing of emotions such as fear, pleasure, and anger.