Project I Has an Initial Cash Outflow of $18,300 and Annual

question 39

Multiple Choice

Project I has an initial cash outflow of $18,300 and annual cash flows of $8,700 for Years 1 to 3.Project II has an initial cash outflow of $25,400 and annual cash flows of $10,500 for Years 1 to 3.These projects are mutually exclusive.The required rate of return is 11 percent.Based on the incremental NPV_{(II - I)} which project(s) should be accepted and why?

• A)Project II;because the incremental NPV_{(II - I)} is negative.
• B)Project I;because both the incremental NPV_{(II - I)}and NPV_I are positive.
• C)Both Project I and II;because both project NPVs are positive.
• D)Project II;because it has the larger NPV.
• E)Project I;because the incremental NPV_{(II - I)} is negative and NPV_I is positive.

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Definitions:

Amphetamine

A stimulant drug that affects the central nervous system, used medically to treat attention deficit hyperactivity disorder (ADHD) and narcolepsy.

Tranquilizers

Medications used to treat anxiety and tension by reducing the central nervous system's activity, often prescribed for their sedative and muscle-relaxing effects.

MDMA

A synthetic drug that acts as a stimulant and hallucinogen, often used recreationally for its effects on mood and perception.

Pathogen

A microorganism that causes disease, such as viruses, bacteria, and fungi.