Table 12.6 Yong Importers, an Asian Import Company, Is Evaluating Two Mutually

question 63

Multiple Choice

Table 12.6
Yong Importers, an Asian import company, is evaluating two mutually exclusive projects, A and B. The relevant cash flows for each project are given in the table below. The cost of capital for use in evaluating each of these equally risky projects is 10 percent.
-Which project should be chosen using the Annualized NPV approach? (See Table 12.6)

• A) Project A because its annualized NPV is higher
• B) Project B because its NPV is higher
• C) Project A because its IRR is higher
• D) Project B because its annualized NPV is higher

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Definitions:

Sensitive Ecosystems

Natural environments that are highly responsive to environmental changes or disturbances, often requiring special protection due to their fragility and ecological significance.

Fishery Collapse

The decline of a fishery to a point where it can no longer sustain a viable fishing activity, often due to overfishing, pollution, or habitat destruction.

Harvested Rate

The speed or quantity at which natural resources, such as crops or timber, are collected or extracted from the environment over a given time period.

Property Rights

Legal rights to use, control, and dispose of land, goods, or intellectual property.