Markman & Sons Is Considering Projects S and L

question 90

Multiple Choice

Markman & Sons is considering Projects S and L.These projects are mutually exclusive,equally risky,and not repeatable and their cash flows are shown below.If the decision is made by choosing the project with the higher IRR,how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the project with the higher IRR will also have the higher NPV,i.e.,no conflict will exist.

• A)$5.47
• B)$6.02
• C)$6.62
• D)$7.29
• E)$7.82

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Definitions:

Organizational Norms

The shared expectations and rules that guide behavior of people within an organization.

Disjunctive Socialization

is a process in which new members of a group or organization have to acquire knowledge and skills that are significantly different from those of existing members.

Institutionalized Socialization

The process by which individuals are taught and trained to internalize and follow the norms, values, and behaviors considered appropriate within a given society or organization.

Disjunctive Tactics

Strategies or methods that involve choosing alternatives that are not naturally connected or are divergent in approach.