Carolina Company Is Considering Projects S and L, Whose Cash

question 46

Multiple Choice

Carolina Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost. $\begin{array} { c c c c c c } r : 7.75 \% & & & & \\\text { Year } & { 0} & 1 & 2 & 3 & 4 \\\mathrm{CF}_{\mathrm{S}}& - \$ 1,050 & \$ 675 & \$ 650 & & \\\mathrm { CF } _ { \mathrm { L } } & - \$ 1,050 & \$ 360 & \$ 360 & \$ 360 & 360\end{array}$

• A) $11.45
• B) $12.72
• C) $14.63
• D) $16.82
• E) $19.35

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Definitions:

Sclereids

A type of plant cell known for their thick, lignified walls, contributing to the hardness of seeds, nuts, and fruit pits.

Lateral Roots

Secondary roots that grow out from the main root, improving the plant’s stability and water absorption.

Palisade Mesophyll

The layer of vertically elongated cells found in the leaves of plants, rich in chloroplasts, where most photosynthesis occurs.

Spongy Mesophyll

A layer of loosely arranged, irregularly shaped cells in the leaf, allowing for gas exchange and containing chloroplasts for photosynthesis.