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:

Width of Confidence Interval

The measure of the precision or uncertainty of an estimation, calculated as the difference between the upper and lower bounds of the interval.

Sample Size

The quantity of collected data points or observations from a population aimed at conducting statistical analysis.

Upper Limit

The highest value that a variable or parameter can assume in a given context.

Confidence Interval

A range of values, derived from sample data, that is likely to contain the value of an unknown population parameter, with a certain degree of confidence.