You Are Considering Two Independent Projects with the Following Cash

question 10

Multiple Choice

You are considering two independent projects with the following cash flows. The required return for both projects is 16 percent. Given this information, which one of the following statements is correct?

• A)You should accept Project A and reject Project B based on their respective NPVs.
• B)You should accept Project B and reject Project A based on their respective NPVs.
• C)You should accept Project A and reject Project B based on their respective IRRs.
• D)You should accept Project B and reject Project A based on their respective IRRs.
• E)You should accept both projects based on both the NPV and IRR decision rules.

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Definitions:

Creativity

The capacity to produce new ideas, insights, inventions, products, or artistic objects that are considered to be unique, useful, and of value to others.

Engineering Problem

A challenge or issue that requires technical and scientific knowledge to solve, often encountered in the field of engineering.

Grit

The perseverance and passion for long-term goals.

Entrepreneur

An individual who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.