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:

Mutual Agency

The legal principle in a partnership where each partner is empowered to make decisions and enter into contracts on behalf of the partnership.

Partnerships

A form of business structure where two or more individuals share ownership, profits, and liabilities, operating under a legal partnership agreement.

Distributions of Income

The process by which earned income or profits are paid out to stakeholders, such as dividends to shareholders.

Loss

The negative financial result from operations, investments, or other business activities where expenses exceed revenues.