Which of the Following Projects Would You Feel Safest in Accepting

question 34

Multiple Choice

Which of the following projects would you feel safest in accepting? Assume the opportunity cost of capital to be 12% for each project.

• A) "A" has a small, but negative, NPV.
• B) "B" has a positive NPV when discounted at 10%.
• C) "C's" cost of capital exceeds its rate of return.
• D) "D" has a zero NPV when discounted at 14%.

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Definitions:

Company Accounts

Financial records that detail the financial activities and condition of a business.

Business Transactions

Exchanges involving economic consideration between two entities that affect the financial position of a business.

Debits

Entries that are recorded on the left side of a ledger account which increase asset or expense accounts, or decrease liability, equity, or revenue accounts.

Credit Side

The right side of an accounting ledger where credits are recorded, often indicating a decrease in assets or an increase in liability or equity.