Two Mutually Exclusive Projects Have the Same IRR

question 94

Multiple Choice

Two mutually exclusive projects have the same IRR.When will you be indifferent between them?

• A) When the IRR is equal to the cost of capital.
• B) Always if they have the same IRR.
• C) When the IRR is less than the cost of capital.
• D) When there is only one change in the sign of the cash flows.

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Definitions:

Independent Regulatory Agency

A federal organization that creates and enforces rules in its specific sphere of influence, independent of executive control.

Government Corporation

A business owned by the government that operates with a degree of independence to provide services that could be commercial in nature.

Civil Service

The body of government employees who are employed on merit system principles, excluding military and political appointments.

Partisanship

Devotion or allegiance to a particular political party or cause, sometimes resulting in a polarized political environment.