Projects C and D Both Have Normal Cash Flows and Are

question 82

Multiple Choice

Projects C and D both have normal cash flows and are mutually exclusive. Project C has a higher NPV if the cost of capital is less than 12%, whereas Project D has a higher NPV if the cost of capital exceeds 12%. Which of the following statements is CORRECT?

• A) project d is probably larger in scale than project c.
• B) project c probably has a faster payback.
• C) project c probably has a higher irr.
• D) the crossover rate between the two projects is below 12%.
• E) project d probably has a higher irr.

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Definitions:

Health Care Market

The aggregation of all entities (providers, payers, and patients) involved in the production, distribution, and consumption of health care services.

Productivity Growth

The rate at which an economy's or an industry's output per unit of input (labor, capital, etc.) increases over time, indicating improvement in efficiency.

Asymmetric Information

A situation where one party in a transaction has more or better information than the other, often leading to an imbalance in the transaction.

Health Care Costs

The total expenditures for services and products related to the treatment and prevention of disease or the maintenance of health.