Projects C and D Both Have Normal Cash Flows and Are

question 62

Multiple Choice

Projects C and D both have normal cash flows and are mutually exclusive.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 is probably larger in scale than Project C.
• B) Project C probably has a faster payback.
• C) Project C probably has a higher IRR.
• D) The crossover rate between the two projects is below 12%.
• E) Project D probably has a higher IRR.

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Definitions:

Decision Making

is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Reward System

A structured plan designed to motivate and recognize employees' performance, often including financial and non-financial rewards.

Persistence

The ability to continue steadfastly or firmly in some purpose, course, or task, despite difficulties or obstacles.

Direction of Attention

The management and focus of cognitive resources on specific stimuli while ignoring others, crucial for effective task performance.