Two Mutually Exclusive Projects Each Have a Cost of $10,000

question 157

Multiple Choice

Two mutually exclusive projects each have a cost of $10,000.The total,undiscounted cash flows from Project L are $15,000,while the undiscounted cash flows from Project S total $13,000.Their NPV profiles cross at a discount rate of 10 percent.Which of the following statements best describes this situation?

• A) The NPV and IRR methods will select the same project if the required rate of return is greater than 10 percent;for example,18 percent.
• B) The NPV and IRR methods will select the same project if the required rate of return is less than 10 percent;for example,8 percent.
• C) To determine if a ranking conflict will occur between the two projects the required rate of return is needed as well as an additional piece of information.
• D) Project L should be selected at any required rate of return,because it has a higher IRR.
• E) Project S should be selected at any required rate of return,because it has a higher IRR.

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Definitions:

Interest Inventories

Psychological assessment tools designed to help individuals identify their interests and preferences, often used in career planning and counseling.

Psychodynamic Issues

Refers to problems or disorders that arise from internal psychological conflicts and unconscious motives based on psychodynamic theories.

Environmental Concerns

Issues related to the protection of the natural environment and the impact of human activity on ecological health.

COPS

A vocational guidance tool that stands for Career Occupational Preference System, used to help individuals identify their interests and potential career paths.