NPV and IRR May Give Conflicting Decisions for Mutually Exclusive

question 64

Multiple Choice

NPV and IRR may give conflicting decisions for mutually exclusive projects because:

• A) the risk of the projects may differ.
• B) the scale of the projects may differ.
• C) the discount rates on the projects may differ.
• D) all of the above.

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Definitions:

Setting up Equipment

The process of assembling, arranging, and making operational machinery or apparatus needed for a specific task or purpose.

Activity Rates

Charges or fees based on predetermined activities used in costing systems to allocate indirect costs to products.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing a more accurate product cost.

Activity Rates

The costs or rates associated with specific activities used in activity-based costing to allocate expenses to products or services.