Suppose Your Firm Is Considering Two Mutually Exclusive, Required Projects

question 63

Multiple Choice

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 10 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three and a half years, respectively. $$\begin{array} { l l l l l } \text { Time } & 0 & 1 & 2 & 3 \\\text { Project A Cash Flow } & - 1,000 & 300 & 400 & 700 \\\text { Project B Cash Flow } & - 500 & 200 & 400 & 300\end{array}$$ Use the IRR decision rule to evaluate these projects; which one(s) should be accepted or rejected?

• A)Accept both A and B
• B)Accept neither A nor B
• C)Accept A, reject B
• D)Reject A, accept B

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Definitions:

Chemical Stimulus

A type of stimulus involving chemicals that can initiate a biological response in an organism or cell.

Olfactory

Relating to the sense of smell or the organs of smell.

Facial

Pertaining to the face or a beauty treatment for the face.

Sympathetic Division

Part of the autonomic nervous system that prepares the body for physical activity by accelerating heart rate, widening bronchial passages, decreasing motility of the large intestine, and more.