A Division Manager Is Choosing Between Two Mutually Exclusive Projects

question 39

Multiple Choice

A division manager is choosing between two mutually exclusive projects. The company requires any project to earn at least 12%. The manager believes that cash inflows from the project can be reinvested at the rate of 12%. Which project will the manager likely choose?

• A) Project B
• B) Project A
• C) both Projects A and B
• D) neither Project A nor B

Evaluate how to improve production capacities and efficiencies in manufacturing.

Identify differences between financial and managerial accounting in terms of orientation and requirements.

Understand the lean business model and its components.

Insight into the implementation phase of management decisions.

---

Definitions:

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at a predetermined price within a specific timeframe.

Warrants

Warrants are financial instruments that give the holder the right, but not the obligation, to buy a company's stock at a predetermined price before a specified expiration date.

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell shares of a stock at a specified price within a given time period.

Warrants

Options issued by a company that give the holder the right to purchase the company's stock at a specified price before a certain date.