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.
• E)invest in project A,since IRR_A > IRR_B.

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Definitions:

Watered Shares

Shares issued in exchange for property that has been overvalued. Also called watered stock. See also discount shares.

Overvalued

A financial situation where the price of an asset exceeds its intrinsic value.

Board of Directors

A group of individuals elected by the shareholders of a corporation to oversee the management and make major decisions affecting the company's policy and strategy.

MBCA

The Model Business Corporation Act, a set of statutory provisions designed for the incorporation and operation of a business corporation.