Boleyn Company Is Considering Two Projects -Refer to the Figure

question 12

Multiple Choice

Boleyn Company is considering two projects.
Present value of an annuity of $1 in arrears
$\begin{array}{lrr}&\text { Project } \mathrm{A}&\text { Project } \mathrm{B}\\\text { Initial investment } & \$ 100,000 & \$ 25,000 \\\text { Annual cash flows } & \$ 18,750 & \$ 8,580 \\\text { Life of the project } & 8 \text { years } & 4 \text { years } \\\text { Depreciation per year } & \$ 25,000 & \$ 6,250\end{array}$ $\begin{array}{|c|l|l|l|l|}\hline \text { Periods } & 8 \% & 10 \% & 12 \% & 14 \% \\\hline 1 & 0.926 & 0.909 & 0.893 & 0.877 \\\hline 2 & 1.783 & 1.736 & 1.690 & 1.647 \\\hline 3 & 2.577 & 2.487 & 2.402 & 2.322 \\\hline 4 & 3.312 & 3.170 & 3.037 & 2.914 \\\hline 5 & 3.993 & 3.791 & 3.605 & 4.433 \\\hline 6 & 4.623 & 4.355 & 4.111 & 3.889 \\\hline 7 & 5.206 & 4.868 & 4.564 & 4.288 \\\hline 8 & 5.747 & 5.335 & 4.968 & 4.639 \\\hline 9 & 6.247 & 5.759 & 5.328 & 4.946 \\\hline 10 & 6.710 & 6.145 & 5.650 & 5.216 \\\hline\end{array}$
-Refer to the Figure.Which of the two projects,A or B,has a higher internal rate of return?

• A)Project A with an IRR of 10%
• B)Project B with an IRR of 10%
• C)Project A with an IRR of 14%
• D)Project B with an IRR of 14%

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Definitions:

Conscientiousness

A personality trait characterized by diligence, carefulness, and a strong sense of duty.

Unconscious Processes

Mental activities below the level of conscious awareness that influence thoughts, feelings, and behaviors.

Stable

Characterized by the quality of being consistent, unchanging, and free from sudden alterations or volatility.

Long-Lasting

Continuing or enduring for an extended period of time without significant deterioration or loss of quality.