The Walk-Up Window Is Considering Two Mutually Exclusive Projects

question 13

Multiple Choice

The Walk-Up Window is considering two mutually exclusive projects.Project A has an initial cost of $64,230 and annual cash flows of $25,200 for three years.Project B has an initial cost of $45,400 and annual cash flows of $21,400,$21,900,and $10,200 for Years 1 to 3,respectively.What is the incremental IRR_A-B? Which project should be accepted if the discount rate is 9 percent? Which project should be accepted if the discount rate is 6 percent?

• A)6)65%;Project A;Project A
• B)6)65%;Project B;Project A
• C)7)21%;Project A;Project B
• D)7)21%;Project B: Project A
• E)6)65%;Project A;Project B

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Definitions:

Maintenance Therapy

Ongoing treatment aimed at stabilizing a patient's condition and preventing relapse after initial successful treatment of a disease.

Tricyclic

A class of antidepressant drugs that work by inhibiting the reuptake of certain neurotransmitters, thereby increasing their levels in the brain.

MAO Inhibitor

An antidepressant drug that prevents the action of the enzyme monoamine oxidase.

Tyramine

A chemical that, if allowed to accumulate, can raise blood pressure dangerously. It is found in many common foods and is broken down by MAO.