When Choosing Between Projects,an Alternative to Comparing Their IRRs Is

question 21

Multiple Choice

When choosing between projects,an alternative to comparing their IRRs is:

• A)to compute the incremental IRR,which tells us the discount rate at which it becomes profitable to switch from one project to the other.
• B)to compute the incremental payback period,which tells us the number of years during which it becomes profitable to switch from one project to the other.
• C)to compute the incremental NPV,which tells us the discount rate at which it becomes profitable to switch from one project to the other.
• D)There is no alternative selection criterion to comparing IRRs.

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Definitions:

Surplus

The amount by which quantity supplied exceeds quantity demanded, often resulting in excess goods and a decrease in prices.

Shortage

A situation in which demand for a good or service exceeds its supply in a market.

Equilibrium

Equilibrium is the state in a market where the quantity supplied equals the quantity demanded, resulting in market stability and no incentive for price changes.

Minimum Wage

The lowest legally permissible wage that employers can pay their employees, intended to protect workers from unduly low pay.