Consider Two Projects,A and B

question 85

Multiple Choice

Consider two projects,A and B.The present value (PV) of cash inflows for project A is $55,000,while the present value of cash outflows for this project is $50,000.Project B,on the other hand,has the following characteristics: PV of cash inflows = $24,000;PV of cash outflows = $20,000.Assume that these two projects are mutually exclusive.Assume that the company has adequate capital to fund either investment option.All of the following statements are true except:

• A)The NPV of Project A is $5,000.
• B)The IRR of Project A is greater than the cost of capital (discount rate).
• C)The profitability index (PI)for Project A is 1:1.
• D)Project A is preferable to Project B (all else held constant).

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Definitions:

Conversion

In law, the unauthorized act of taking or using someone else's property as if it were your own, leading to potential civil liability.

Voluntarily Participate

To choose to take part in an activity or process without being coerced or compelled to do so.

Consent

Agreement or approval for something to happen, given freely and consciously by a person capable of making the decision.

Slander Per Se

Defamatory statements that are considered damaging on their face, without the need for the plaintiff to prove actual harm, including allegations of a loathsome disease, professional incompetence, criminal behavior, or unchastity.