Whitney Crane Inc

question 53

Multiple Choice

Whitney Crane Inc.has the following independent investment opportunities for the coming year: The IRRs for Project A and C, respectively, are:

• A) 16% and 14%
• B) 18% and 10%
• C) 18% and 20%
• D) 18% and 13%
• E) 16% and 13%

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Definitions:

Economic Efficiency

A state where resources are allocated in a manner that maximizes the production of goods and services without wasting any resources.

Economies of Scale

Financial advantages gained by firms due to their operational size, where a greater volume of production usually correlates with a lower cost for each output unit.

Per-unit Costs

The cost incurred for producing or acquiring a single unit of a product or service.

Natural Monopoly

A market condition where a single firm can supply a good or service to an entire market at a lower cost than two or more firms due to economies of scale.