Beige Inc Is Evaluating Three Capital Budgeting Projects Whose Internal Rates

question 9

Multiple Choice

Beige Inc. is evaluating three capital budgeting projects whose internal rates of return (IRRs) are greater than the firm's marginal cost of capital (MCC) . Beige should choose:

• A)the projects that minimize its marginal cost of capital.
• B)all of the projects whose internal rates of return (IRRs) are greater than the firm's weighted average cost of capital WACC).
• C)the projects that maximize its dividend payout.
• D)the projects that generate the greatest combination of cash inflows.
• E)the one (single) project that has the highest net present value (NPV).

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Definitions:

Consumer Welfare

The overall well-being and interest of consumers, focusing on the quality, affordability, and accessibility of goods and services.

Consumer Financial Protection Bureau

A U.S. government agency aimed at ensuring consumers are treated fairly by banks, lenders, and other financial institutions, and protecting consumers from unfair, deceptive, or abusive practices.

Financial Crisis

A significant disruption in the flow of funds within financial markets and institutions, leading to a severe decline in asset values and liquidity, often resulting in a recession.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, resulting in reduced costs per unit of output.