Two Projects Being Considered Are Mutually Exclusive and Have the Following

question 39

Multiple Choice

Two projects being considered are mutually exclusive and have the following cash flows: If the required rate of return on these projects is 10 percent,which would be chosen and why?

• A) Project B because of higher NPV.
• B) Project B because of higher IRR.
• C) Project A because of higher NPV.
• D) Project A because of higher IRR.
• E) Neither, because both have IRRs less than the cost of capital.

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Definitions:

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Event

An occurrence or happening, especially one of significance, that can be observed or participated in.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Green Party

A political party that emphasizes environmental issues, social justice, and sustainability, often advocating for green policies.