Two Projects Being Considered by a Firm Are Mutually Exclusive

question 74

Multiple Choice

Two projects being considered by a firm are mutually exclusive and have the following projected cash flows: Based only on the information given,which of the two projects would be preferred,and why?

• A) Project A,because it has a shorter payback period.
• B) Project B,because it has a higher IRR.
• C) Indifferent,because the projects have equal IRRs.
• D) Include both in the capital budget,since the sum of the cash inflows exceeds the initial investment in both cases.
• E) Choose neither,since their NPVs are negative.

---

Definitions:

Construction Rebar

Reinforcing steel bars used in construction to enhance the tensile strength of concrete structures.

European Union

A political and economic union of 27 European countries that participate in a single market allowing free movement of goods, services, capital, and people.

Google

A multinational technology company specializing in Internet-related services and products, including search engines, online advertising technologies, and software.

Monopolistic Market

A market structure characterized by a single seller who has exclusive control over a product or service, limiting competition.