Which Statement About the Selection of Mutually Exclusive Projects Using

question 28

Multiple Choice

Which statement about the selection of mutually exclusive projects using the benefit-cost ratio method is true?

• A)The benefit-cost ratio selects the project with the lowest ratio.
• B)The benefit-cost ratio may rank projects differently from the net present value method.
• C)The benefit-cost ratio may select a project,even though it may have a negative net present value.
• D)The benefit-cost ratio will not select a project with a ratio greater than 1.

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Definitions:

Future Trading

The buying and selling of financial instruments or commodities for future delivery on a futures exchange.

Expected Dividend Rate

A projection of the amount (often as a percentage) a company is expected to pay out to shareholders in dividends for each share of stock.

Issued Shares

The number of shares that have been allocated to be sold and are held by shareholders, including both public investors and company officers or insiders.