Projects C and D Are Mutually Exclusive and Have Normal

question 23

Multiple Choice

Projects C and D are mutually exclusive and have normal cash flows.Project C has a higher NPV if the WACC is less than 12%,whereas Project D has a higher NPV if the WACC exceeds 12%.Which of the following statements is correct?

• A)Project D has a higher IRR.
• B)Project D is probably larger in scale than Project C.
• C)Project C probably has a faster payback.
• D)Project C has a higher IRR.

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Definitions:

Producing

The act or process of creating goods or services using inputs like labor, materials, and machines.

Maximum Weekly Profit

The highest amount of financial gain a business can achieve in one week, based on its revenue and costs.

Market Price

The existing cost at which a service or asset is available for purchase or sale on the open market.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship.