Matt Is Analyzing Two Mutually Exclusive Projects of Similar Size

question 48

Multiple Choice

Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives. Matt has been asked for his best recommendation given this information. His recommendation should be to accept:

• A) project B because it has the shortest payback period.
• B) both projects as they both have positive net present values.
• C) project A and reject project B based on their net present values.
• D) project B and reject project A based on other criteria not mentioned in the problem.
• E) project B and reject project A based on both the payback period and the average accounting return.

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Definitions:

TTM

Transtheoretical Model, a theory of behavior change that evaluates an individual's readiness to act on a new healthier behavior.

Transtheoretical Model

A theory of behavior change that assesses an individual's readiness to act on a new healthier behavior and provides strategies to guide the individual through the stages of change to Action and Maintenance.

Maintenance Stage

A phase in behavior change where individuals work to sustain the new behavior over time.

External Rewards

Incentives provided by external sources, such as money, grades, or praise, to motivate behavior.