Use the Table for the Question(s)below

question 65

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects with cash flows in $:
-Assume that projects Alpha and Beta are mutually exclusive.Which of the following statements is true regarding the investment decision tools' suitability for deciding between projects Alpha & Beta?

• A)The incremental IRR should not be used since the projects have different lives.
• B)The incremental IRR should not be used since the projects have different discount rates.
• C)The incremental IRR should not be used since the projects have different cash flow patterns.
• D)Both the NPV and incremental IRR approaches are appropriate to solve this problem.

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Definitions:

Adjusting Journal Entry

A record made in the books to correct or update financial statements prior to issuing them, ensuring they reflect true values.

Fees Earned

Revenue generated from providing services, as opposed to selling goods, in a given period.

Prepaid Expense

An expense that has been paid in advance and will be recognized as an expense in a future accounting period.

Normal Balance

The side of an account, either debit or credit, where increases in the account are recorded.