Consider the Following Projects, X and Y, Where the Firm

question 43

Multiple Choice

Consider the following projects, X and Y, where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project Y also costs $600, and generates cash flows of $500 and $275 for the next 2 years, respectively. Which investment should the firm choose if the cost of capital is 10 percent?

• A) Project X, since it has a higher NPV than Project Y
• B) Project Y, since it has a higher NPV than Project X
• C) Project X, since it has a lower NPV than Project Y
• D) Project Y, since it has a lower NPV than Project X

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Definitions:

Substage

In microscopy, the part of the microscope below the stage, often housing the illuminator and condenser, used to adjust the intensity and focus of light on the specimen.

Revolving Nosepiece

A component of a microscope that holds multiple objective lenses and allows the user to switch between them.

Coarse Adjustment

The feature on a microscope that allows for large, rapid changes in focus, usually done before fine adjustments.

Objectives

Specific, measurable goals set to achieve desired outcomes in various contexts, such as projects or personal development.