Use the Information for the Question(s)below

question 5

Multiple Choice

Use the information for the question(s) below.

-If WiseGuy Inc is choosing one of the above mutually exclusive projects (Project A or Project B) ,given a discount rate of 8%,which should the company choose?

• A)Project A
• B)Project B
• C)Neither project - both have negative NPV.
• D)Both projects - both have positive NPV.

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Definitions:

Cost of Goods Sold

The total cost of manufacturing or purchasing the goods a company has sold during a period.

Taxable Income

The portion of individual or corporate income subject to taxation, after all deductions and exemptions.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested in the business or used to pay off debt.

Fixed Assets

Fixed Assets are long-term tangible property that a firm owns and uses in its operations to generate income, such as machinery, buildings, and equipment.