A Firm Is Considering Projects S and L,whose Cash Flows

question 88

Multiple Choice

A firm is considering Projects S and L,whose cash flows are shown below.These projects are mutually exclusive,equally risky,and not repeatable.The CEO wants to use the IRR criterion,while the CFO favors the NPV method.You were hired to advise the firm on the best procedure.If the wrong decision criterion is used,how much potential value would the firm lose?

• A) $45.51
• B) $50.56
• C) $62.70
• D) $57.64
• E) $45.00

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Definitions:

Nucleic Acids

Essential biomolecules for life, such as DNA and RNA, are responsible for carrying genetic information and participating in the synthesis of proteins.

Nitrogen

A chemical element with symbol N and atomic number 7, essential for all living organisms, primarily involved in protein synthesis and other vital biological processes.

Proteins

Large, complex molecules essential for the structure, function, and regulation of the body's tissues and organs.

Hydrothermal Vents

Fissures on the seafloor that emit hot water rich in minerals, found typically along mid-ocean ridges, and are known for supporting unique ecosystems.