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

question 21

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:

Retrieval

The act of accessing and bringing into consciousness information from memory.

Semantic Memory

Semantic Memory is a component of long-term memory involved with the storage of general knowledge of facts, concepts, and meanings.

State Capital

The city designated as the administrative center of a state, where government buildings and officials reside.

Retroactive Interference

A phenomenon where newly learned information interferes with the recall of previously learned information.