Monday, November 11, 2019

ou are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation

You are analyzing a project and have gathered the following data:

   

Based on the payback period of _____ years for this project, you should _____ the project. 
 
A. 
2.79; accept

B. 
3.79; accept

C. 
2.46; reject

D. 
2.79; reject

E. 
3.79; reject


 


93.
You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value.

   

Should you accept or reject these projects based on net present value analysis? 
 
A. 
accept Project A and reject Project B

B. 
reject Project A and accept Project B

C. 
accept both Projects A and B

D. 
reject both Projects A and B

E. 
You cannot make this decision based on net present value analysis.


 


94.
You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value.

   

Should you accept or reject these projects based on IRR analysis? 
 
A. 
accept Project A and reject Project B

B. 
reject Project A and accept Project B

C. 
accept both Projects A and B

D. 
reject both Projects A and B

E. 
You cannot make this decision based on internal rate of return analysis.
Because these are mutually exclusive projects you should not apply the IRR rule.

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