Lancaster Corp

question 36

Multiple Choice

Lancaster Corp.is considering two equally risky, mutually exclusive projects, both of which have normal cash flows.Project A has an IRR of 11%, while Project B's IRR is 14%.When the WACC is 8%, the projects have the same NPV.Given this information, which of the following statements is CORRECT?

• A) If the WACC is 9%, Project A's NPV will be higher than Project B's.
• B) If the WACC is 6%, Project B's NPV will be higher than Project A's.
• C) If the WACC is greater than 14%, Project A's IRR will exceed Project B's.
• D) If the WACC is 9%, Project B's NPV will be higher than Project A's.
• E) If the WACC is 13%, Project A's NPV will be higher than Project B's.

Understand the treatment of factory overhead, including the concepts of applied, underapplied, and overapplied overhead.

Comprehend the role of perpetual inventory systems and the maintenance of controlling accounts and subsidiary ledgers in job order costing.

Learn the treatment of product costs as inventory on the balance sheet until the goods are sold.

Grasp the concept of activity-based costing and its differences from traditional costing methods.

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Definitions:

Sales Tax

A tax levied by a government on the sale of goods and services, collected by the retailer and passed on to the government.

Market Value

The existing cost for purchasing or selling an asset or service in the open market.

Property Taxes

Taxes assessed on real estate by the local government, based on the property's value.

Taxable Income

The amount of income on which the income tax is determined.