Use the Table for the Question(s)below

question 14

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects:

-Assume that projects A and B are mutually exclusive.The correct investment decision and the best rationale for that decision is to

• A)invest in project A,since NPV_B < NPV_A.
• B)invest in project B,since IRR_B > IRR_A.
• C)invest in project B,since NPV_B > NPV_A.
• D)invest in project A,since NPV_A > 0.

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Definitions:

Activity-based Costing

A costing methodology that assigns overhead and indirect costs to specific products or activities based on their consumption.

Avoidable Cost

A cost that can be eliminated by choosing one alternative over another in a decision. This term is synonymous with differential cost and relevant cost.

Sunk Costs

These are costs that have already been incurred and cannot be recovered, thus should not affect future business decisions.

Future Costs

Costs that will be incurred in the future as a result of current decisions or plans.