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:

Divergent Boundary

A tectonic plate boundary where two plates are moving away from each other, leading to the creation of new crust.

Transform Boundary

A type of plate boundary where two tectonic plates slide past each other horizontally, often associated with earthquakes.

Mantle

The layer of the Earth between the crust and the outer core, composed of silicate rocks that are rich in magnesium and iron.

Melting

The process of changing from a solid to a liquid state due to an increase in temperature and/or a decrease in pressure.