If Capital Projects Are Mutually Exclusive,which of the Following Statements

question 8

Multiple Choice

If capital projects are mutually exclusive,which of the following statements is TRUE?

• A)Acceptance of one project means the firm will reject the other mutually exclusive projects.
• B)The NPV rule still applies as a decision-making process.
• C)The IRR rule may be inconsistent in rank order with the NPV rule when choosing among mutually exclusive projects.
• D)All of the above.

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Definitions:

Cumulative Surplus

The total accumulated amount of profits, after all expenses and dividends are paid, that a company has at its disposal for reinvestment or distribution.

Minimum Cash Balance

The smallest amount of cash that a company seeks to maintain in its accounts to ensure financial stability and operational efficiency.

Accounts Receivable Balance

The total amount of money owed to a company by its customers for goods or services provided on credit, yet to be paid.

Accounts Receivable Period

The average number of days it takes for a business to collect payments owed by its customers.