Two Mutually Exclusive Projects Produce the Same Positive NPV at a Discount

question 74

Multiple Choice

Two mutually exclusive projects produce the same positive NPV at a discount rate of 11.34 percent.Both projects have 4-year lives.Project A has larger cash flows than Project B in the first 2 years.Given this information,you know that

• A)it makes no difference which project you accept as long as the discount rate does not exceed 11.34 percent.
• B)Project A should always be preferred.
• C)one project will be preferred at rates less than 11.34 percent and the other will be preferred at higher rates.
• D)Project B must require a smaller investment than Project A at Time 0.
• E)Project B should only be accepted if the discount rate is 11.34 percent.

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Definitions:

Pallor

An abnormal loss of color from the skin or mucous membranes, often indicative of illness, stress, or poor blood circulation.

Skin Breakdown

Refers to the deterioration of skin integrity, often occurring in immobile individuals, leading to conditions like ulcers.

Friction

The resistance that one surface or object encounters when moving over another, which can have implications in both physical phenomena and medical conditions.

Shear

A force that causes layers of material to slide past one another in opposite directions.