Suppose Your Firm Is Considering Two Mutually Exclusive, Required Projects

question 76

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 NPV 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:

Haloperidol

An antipsychotic medication used to treat disorders such as schizophrenia by altering the effects of chemicals in the brain.

Muscle Stiffness

A condition in which muscles feel tight and rigid, often leading to discomfort and restricting movement.

Withdrawn Patient

Refers to an individual receiving healthcare who is introverted or showing reluctance in social interaction, often seen in various mental health conditions.

Catatonia

A behavioral syndrome marked by an inability to move normally, which can include symptoms such as stupor, mutism, rigidity, or agitation, often associated with schizophrenia and other neuropsychiatric disorders.