Silverman Co A) $3212
B) $35

question 7

Multiple Choice

Silverman Co.is considering Projects S and L,whose cash flows are shown below.These projects are mutually exclusive,equally risky,and not repeatable.If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV,how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. $\begin{array}{lccccc}\text { WACC: } & 8.75 \% & & & \\\text { Year } & 0 & 1 & 2 & 3 & 4 \\\mathrm{CF}_{\mathrm{S}} & -\$ 1,100 & \$ 375 & \$ 375 & \$ 375 & \$ 375 \\\mathrm{CF}_{\mathrm{L}} & -\$ 2,200 & \$ 725 & \$ 725 & \$ 725 & \$ 725\end{array}$

• A) $32.12
• B) $35.33
• C) $38.87
• D) $40.15
• E) $42.16

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Definitions:

Club Goods

Goods that are excludable but non-rivalrous, meaning they can be accessed by members of a specific group but one person's use does not diminish availability for others.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they can be used by everyone and one person's use does not reduce availability for others.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available to all members of society and one person's consumption does not reduce availability for others.

Common Resources

Resources that are freely accessible to all members of a society but are subject to overuse and depletion because they are not privately owned.