Suppose Your Firm Is Considering Two Mutually Exclusive, Required Projects

question 110

Multiple Choice

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and three years, respectively. $$\begin{array} { | l | c | c | c | c | } \hline \text { Time } & 0 & 1 & 2 & 3 \\\hline \text { Project A Cash Flow } & - 20,000 & 10,000 & 30,000 & 1,000 \\\text { Project B Cash Flow } & - 30,000 & 10,000 & 20,000 & 50,000 \\\hline\end{array}$$
Use the MIRR decision rule to evaluate these projects; which one(s) should be accepted or rejected?

• A)Accept both A and B
• B)Accept neither A nor B
• C)Accept A, reject B
• D)Reject A, accept B

---

Definitions:

Ageist Attitudes

Prejudices or discrimination against individuals or groups based on their age, often resulting in stereotyping and limiting opportunities.

Informed Consent

A process ensuring participants are fully aware of the potential risks and implications involved in a study or procedure before agreeing to participate.

Voluntary Participation

The principle that individuals freely choose to participate in an activity, study, or research without coercion or undue influence.

Hypothesis

A tentative explanation or prediction that can be tested through scientific research.