A Company Is Analyzing Two Mutually Exclusive Projects, S and L

question 63

Multiple Choice

A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below: The company's required rate of return is 12 percent, and it can get an unlimited amount of funds at that rate.What is the IRR of the better project, i.e., the project which the company should choose if it wants to maximize the price of its stock?

• A) 12.00%
• B) 15.53%
• C) 18.62%
• D) 19.08%
• E) 20.46%

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Definitions:

Standardized Part

Components or items that are manufactured in large quantities to uniform specifications, ensuring compatibility and interchangeability.

Gantt Chart

A visual project management tool that displays tasks or events along a time axis, allowing for the planning and tracking of project progress.

PERT Chart

A project management tool used to schedule, organize, and coordinate tasks within a project, standing for Program Evaluation and Review Technique.