Gamma Inc Is Considering Two Mutually Exclusive Projects with the Following

question 114

Multiple Choice

Gamma Inc. is considering two mutually exclusive projects with the following cash flows. Based on their approximate MIRRs, which project should the company accept? Gamma's cost of capital is 8%. $\begin{array}{lll}\text { Years } & \text { Project A } & \text { Project B } \\& (\$ \text { in millions) } & (\$ \text { in millions) } \\0 & (100) & (85) \\1 & 65 & 44 \\2 & (8) & (5) \\3 & 48 & 55\end{array}$

• A) Project A, as it has an MIRR of 8%
• B) Project B, as it has an MIRR of 5%
• C) Project A, as it has an MIRR of 6%
• D) Project B, as it has an MIRR of 6%

Understand the strategies for achieving sustainability in business operations.

Recognize the differences between Eastern and Western leadership styles in the context of sustainability.

Identify the importance of collaboration with suppliers and partners for sustainable development.

Understand how to avoid short-termism within a company for sustainable growth.

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Definitions:

Fair Value

An estimation of an asset's worth based on current market conditions or the amount for which an asset could be exchanged.

Distribution Agreement

A legal contract between parties governing the terms under which goods or services will be distributed from a supplier to a distributor.

Licensing

The process by which an individual or organization obtains permission to carry out a particular activity or use a particular product.

Agency Relationship

A legal arrangement in which one party, the agent, acts on behalf of another party, the principal, in transactions with a third party.