A Company Is Considering Two Mutually Exclusive Projects, a and B

question 74

Multiple Choice

A company is considering two mutually exclusive projects, A and B Project A requires an initial investment of $200, followed by cash flows of $185, $40, and $15. Project B requires an initial investment of $200, followed by cash flows of $0, $50, and $230. What is the IRR of the project that is best for the company's shareholders? The firm's cost of capital is 10 percent.

• A)15.45 percent
• B)15.12 percent
• C)13.57 percent
• D)12.71 percent

---

Definitions:

Environmental Trends

Patterns and changes in the external environment that can affect an organization's strategies and operations, including technological, societal, and economic shifts.

Quantum Change

Significant, radical transformation or shift in an individual's perspective, often unexpectedly or quickly.

Employee Involvement

The degree to which employees are encouraged to contribute ideas and participate in decisions that affect their work and the organization.

Ethical

Ethical pertains to the principles of right and wrong that guide individual conduct and the decision-making process within an entity.