Langton Inc

question 57

Multiple Choice

Langton Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, while the CFO advocates the MIRR. If the decision is made by choosing the project with the higher IRR rather than the one with the higher MIRR, how much, if any, value will be forgone. In other words, what's the NPV of the chosen project versus the maximum possible NPV? Note that (1) "true value" is measured by NPV, and (2) under some conditions the choice of IRR vs. MIRR will have no effect on the value lost.

• A) $185.90
• B) $197.01
• C) $208.11
• D) $219.22
• E) $230.32

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Definitions:

Medial

Pertaining to or situated toward the midline of the body or an organ.

Lateral

Pertaining to or situated at the side.

Abdominopelvic Cavity

A body cavity comprising the abdominal and pelvic cavities, housing major organs of digestion, reproduction, and excretion.

Pathophysiology

The study of how disease processes affect the function of the body.