Lancaster Corp

question 30

Multiple Choice

Lancaster Corp.is considering two equally risky,mutually exclusive projects,both of which have normal cash flows.Project A has an IRR of 11%,while Project B's IRR is 14%.When the WACC is 8%,the projects have the same NPV.Given this information,which of the following statements is CORRECT?

• A) If the WACC is 9%, Project A's NPV will be higher than Project B's.
• B) If the WACC is 6%, Project B's NPV will be higher than Project A's.
• C) If the WACC is greater than 14%, Project A's IRR will exceed Project B's.
• D) If the WACC is 9%, Project B's NPV will be higher than Project A's.
• E) If the WACC is 13%, Project A's NPV will be higher than Project B's.

Understand the principles of specialization and comparative advantage in international trade.

Analyze the impact of tariffs, quotas, and subsidies on international trade and domestic markets.

Identify and evaluate the factors that contribute to a nation's trade balance and its implications on the economy.

Distinguish between absolute and comparative advantage in the context of global trade.

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Definitions:

Beginning Capital

The amount of capital at the start of an accounting period, forming the basis for measuring capital growth or reduction over that period.

Owner's Withdrawals

Amounts of money or other assets that the owner takes out of the company for personal use.

Owner's Equity

The total value of assets a business owner has rights to after all liabilities are paid off; equity for sole proprietorships.

Liabilities

Financial obligations or debts that a company owes to others, including loans, accounts payable, and mortgages.