Projects S and L Are Equally Risky, Mutually Exclusive, and Have

question 47

Multiple Choice

Projects S and L are equally risky, mutually exclusive, and have normal cash flows. Project S has an IRR of 15%, while Project L's IRR is 12%. The two projects have the same NPV when the cost of capital is 7%. Which of the following statements is CORRECT?

• A) if the cost of capital is 6%, project s will have the higher npv.
• B) if the cost of capital is 13%, project s will have the lower npv.
• C) if the cost of capital is 10%, both projects will have a negative npv.
• D) project s's npv is more sensitive to changes in cost of capital than project l's.
• E) if the cost of capital is 10%, both projects will have positive npvs.

---

Definitions:

Contiguity Principle

A concept in education psychology suggesting that the closer in time two events are, the stronger the association between them.

Multimedia Principle

The educational theory that people learn better from words and pictures together than from words alone.

Sales Sequence

Sales Sequence involves the steps or stages in a sales process, from initial contact with a potential customer to closing the sale, designed to maximize effectiveness and efficiency.

Online and Distance Education

Educational programs that are delivered remotely, allowing students to access learning materials from any location via the internet.