If Two Projects Offer the Same Positive NPV,then They

question 38

Multiple Choice

If two projects offer the same positive NPV,then they:

• A) also have the same IRR.
• B) have the same payback period.
• C) are mutually exclusive projects.
• D) add the same amount of value to the firm.

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Definitions:

Annual Percentage Yield

The real rate of return earned on an investment, taking into account the effect of compounding interest.

Compounded Daily

Refers to the method of calculating interest where the accumulated interest is added to the principal sum every day.

Interest

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.

Deposit

A sum of money placed into a bank account or given as initial payment or security for the purchase of an item.