Use the Information Below to Answer the Following Question(s)

question 186

Multiple Choice

Use the information below to answer the following question(s) .Wet Water Company drills residential and commercial wells.The company is in the process of analyzing the purchase of a new drill.Information on the proposal is provided below:
Note: Other than the initial investment, cash flows are end of period.The working capital is returned at the end of the investment period.
-The net present value method is better than the internal rate of return because

• A)managers generally find the NPV method easier to understand.
• B)it always yields the same result as IRR.
• C)IRR focuses more on accounting income.
• D)it considers the source of cash flows.
• E)the NPV's of different projects can be added together, and investments may have multiple required rates of return.

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Definitions:

Fiduciary Duty

A legal obligation of one party to act solely in the best interest of another party, such as a trustee to the beneficiary, corporate board members to the shareholders, or agents to their principals.

Obligations

Duties or responsibilities that are legally or morally bound to an individual or entity.

Agent

An individual or entity authorized to act on behalf of another, usually in business transactions or legal matters.

Principal

The amount of money borrowed or invested, separate from interest or profit generated from it.