Westchester Corp

question 31

Multiple Choice

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

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Definitions:

Extrinsic Motivation

Extrinsic motivation is driven by external rewards such as money, fame, grades, or praise, influencing an individual's behavior towards achieving a goal.

External Reward

A reward that comes from outside an individual, such as money, praise, or awards, used to motivate behavior.

Activity Pursuit

The involvement and engagement in tasks or activities that are aimed at achieving specific goals or fulfilling interests.

Intrinsic Motivation

The drive to perform an activity for its inherent satisfaction rather than for some separable consequence.