Two projects being considered are mutually exclusive and have the following projected cash flows:
Year Project A Project B
0 -$50,000 -$50,000
1 $15,625 0
2 $15,625 0
3 $15,625 0
4 $15,625 0
5 $15,625 $99,500
If the required rate of return on these projects is 10%, which would be chosen and why?
A) B, because of higher NPV.
B) B, because of higher IRR.
C) A, because of higher NPV.
D) A, because of higher IRR.
E) Neither, because both have IRRs less than the cost of capital.
A
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Anderson Compounds produces two industrial chemical compounds, Gorp and Gumm, from the same process, which last year, cost $480,000 . Anderson produced 20,00 . pounds of Gorp, which sells for $60 per gallon and 60,00 . gallons of Gumm, which sells for $30 per gallon. After the split-off point, Gorp required additional processing costing $300,00 . to make it salable. Using the adjusted sales
method, how much of the joint cost should be allocated to Gorp? a. $120,000 b. $320,000 c. $160,000 d. $192,000
Which of the following accounts probably would be listed before the others in a chart of accounts?
a. Insurance Expense b. Dividends c. Notes Payable d. Accumulated Depreciation, Buildings
The amortization of a customer list are
a. product costs. b. period costs. c. not required under U.S. GAAP. d. not required under IFRS. e. pay back costs.
Why should companies focus more on preliminary and concurrent controls?
What will be an ideal response?