Projects a and B Are Mutually Exclusive

question 41

Multiple Choice

Projects A and B are mutually exclusive. Project A costs $10,000 and is expected to generate cash inflows of $4,000 for 4 years. Project B costs $10,000 and is expected to generate a single cash flow in year 4 of $20,000. The cost of capital is 12%. Which project would you accept and why?

• A) Project B because it has the higher NPV.
• B) Project B because it has the higher IRR.
• C) Project A because it has the higher NPV.
• D) Project A because it has the higher IRR.

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Definitions:

Negotiation

The process of reaching an agreement that both parties find acceptable.

Resistance to Change Approach

Strategies or actions employed to counteract or overcome resistance to changes in an organization or system.

Organizational Structure

A framework of work roles that helps shape and support employee behavior.

Work Roles

The set of responsibilities, tasks, and expectations assigned to an individual in a professional setting, based on their position or job description.