You Are Considering Two Mutually Exclusive Projects with the Following

question 15

Multiple Choice

You are considering two mutually exclusive projects with the following cash flows.Will your choice between the two projects differ if the required rate of return is 8% rather than 11%? If so, what should you do? $\begin{array}{cccl}\underline{\text { Year } }&\underline{\text { Project A }}& & \underline{\text { Project B }} \\0 &-\$ 240,000 & & -\$ 198,900 \\1 &\$ 0 & & \$110,800 \\2 & \$ 0 & & \$ 82,500\\3 & \$ 325,000 & & \$ 45,000\\\end{array}$

• A)yes; Select A at 8% and B at 11%.
• B)yes; Select B at 8% and A at 11%.
• C)yes; Select A at 8% and select neither at 11%.
• D)no; Regardless of the required rate, project A always has the higher NPV.
• E)no; Regardless of the required rate, project B always has the higher NPV.

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Definitions:

Nutrition Facts

Information provided on food packaging that includes serving size, calories, fat content, and other dietary information.

Seller's Option

The right of the seller to choose specific terms in a transaction, such as the time and place of delivery.

Federal Trade Commission Act

A U.S. federal law established in 1914 to prevent unfair competition, deceptive acts, or practices in the marketplace.

U.S. Steel

A major American integrated steel producer with major production operations in the United States and Central Europe.