Projects a and B Are Mutually Exclusive

question 106

Multiple Choice

Projects A and B are mutually exclusive. Project A costs $20,000 and is expected to generate cash inflows of $7,500 for 4 years. Project B costs $10,000 and is expected to generate a single cash flow in year 4 of $20,000. The cost of capital is 12%. Which project would you accept and why?

• A) Project B because it has the higher NPV
• B) Project B because it has the higher IRR
• C) Project A because it has the higher NPV
• D) Project A because it has the higher IRR

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Definitions:

Intermolecular Forces

Attractive forces between molecules that affect their physical properties such as boiling point, melting point, and solubility.

Dimethyl Ether

A colorless gas used as an aerosol propellant and a clean fuel, with the formula \(CH_3OCH_3\), also known as methoxymethane.

London Forces

Weak intermolecular forces, also known as dispersion forces, arising from instantaneous dipoles in molecules, influential in nonpolar compounds.

Sodium Chloride

Sodium chloride is a chemical compound also known as table salt, formed from the ionic bonding of sodium and chlorine atoms.