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

question 96

Multiple Choice

A company is considering two mutually exclusive projects, A and B Project A requires an initial investment of $100, followed by cash flows of $95, $20, and $5. Project B requires an initial investment of $100, followed by cash flows of $0, $20, and $130. 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)15.24 percent
• B)15.96 percent
• C)16.17 percent
• D)15.42 percent

---

Definitions:

Feeling

An emotional state or reaction that arises spontaneously rather than through conscious effort.

Driven

Being strongly motivated or compelled to achieve something.

Unconscious Efforts

Actions or processes that occur without conscious awareness or intention, driven by the unconscious mind.

Defense Mechanisms

Psychological strategies used by individuals to cope with reality and to maintain self-image, often unconsciously.