When Two Mutually Exclusive Projects Are Considered,the NPV Calculations and the IRR

question 42

Multiple Choice

When two mutually exclusive projects are considered,the NPV calculations and the IRR calculations may,under certain circumstances,give conflicting recommendations as to which project to accept.The reason for this result is that in the NPV calculation,cash inflows are assumed to be reinvested at the cost of capital,while in the IRR solution,reinvestment takes place at

• A)the hurdle rate.
• B)the accounting rate of return.
• C)the prime rate.
• D)the project's internal rate of return.

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Definitions:

Public Law 95-109

The Fair Debt Collection Practices Act of 1977, a United States federal law that limits the behavior and actions of third-party debt collectors attempting to collect debts on behalf of another person or entity.

Fair Debt Collection Practices Act

A federal law in the United States that limits the behavior and actions of third-party debt collectors attempting to collect debts on behalf of another person or entity.

Unpaid Debts

Financial obligations that have not been settled or paid by the due date.

Collection Practices

Procedures and methods used by businesses to recover debts from customers.