Projects S and L Are Equally Risky,mutually Exclusive,and Have Normal

question 52

Multiple Choice

Projects S and L are equally risky,mutually exclusive,and have normal cash flows.Project S has an IRR of 15%,while Project L's IRR is 12%.The two projects have the same NPV when the WACC is 7%.Which of the following statements is CORRECT?

• A) If the WACC is 6%, Project S will have the higher NPV.
• B) If the WACC is 13%, Project S will have the lower NPV.
• C) If the WACC is 10%, both projects will have a negative NPV.
• D) Project S's NPV is more sensitive to changes in WACC than Project L's.
• E) If the WACC is 10%, both projects will have positive NPVs.

Understand the legislative process within provinces and the role of the Governor General.

Recognize the right to freedom of conscience and religion in Canada.

Explore the nuances of public and private law, the court system, legal precedents, and the development and impact of statutes and codes.

Understand the basic characteristics and examples of different market structures including perfect competition, monopolistic competition, oligopoly, and monopoly.

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Definitions:

Operating Loss

A financial situation where a business's operating expenses exceed its revenues.

Variable Cost

Expenses that change in proportion with the production activity of a business.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, or insurance.

Operating Income

Operating income is the profit realized from a business's core operations, excluding deductions of interest and taxes.