Douglass Interiors Is Considering Two Mutually Exclusive Projects and Have

question 97

Multiple Choice

Douglass Interiors is considering two mutually exclusive projects and have determined that the crossover rate for these projects is 11.7 percent.Project A has an internal rate of return (IRR) of 15.3 percent and Project B has an IRR of 16.5 percent.Given this information,which one of the following statements is correct?

• A)Project A should be accepted as its IRR is closer to the crossover point than is Project B's IRR.
• B)Project B should be accepted as it has the higher IRR.
• C)Both projects should be accepted as both of the project's IRRs exceed the crossover rate.
• D)Neither project should be accepted since both of the project's IRRs exceed the crossover rate.
• E)You cannot determine which project should be accepted given the information provided.

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Definitions:

Abandoned Property

Property that has been discarded by the owner, who has no intention of reclaiming it.

Lost Property

Property that the owner has involuntarily parted with and then cannot find or recover.

Mislaid Property

Property that is intentionally set down by someone who then forgets to retrieve it, differing from lost or abandoned property.

Prize-Winning Horse

A horse that has won awards or recognition in competitive events or shows due to its performance, breed qualities, or other characteristics.