A Firm Is Evaluating Two Independent Projects Utilizing the Internal

question 100

Multiple Choice

A firm is evaluating two independent projects utilizing the internal rate of return technique. Project X has an initial investment of $80,000 and cash inflows at the end of each of the next five years of $25,000. Project Z has a initial investment of $120,000 and cash inflows at the end of each of the next four years of $40,000. The firm should

• A) accept both if the cost of capital is at most 15 percent.
• B) accept only Z if the cost of capital is at most 15 percent.
• C) accept only X if the cost of capital is at most 15 percent.
• D) none of the above

Learn about the performance evaluation measures and reports for different types of responsibility centers.

Understand how decentralized units operate and make decisions within the broader company context.

Understand the concept of gross profit and how it is calculated for different divisions.

Calculate income from operations and understand its significance in business performance evaluation.

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