The following information on two mutually exclusive projects is given below:n Project A Project B0 -3,000 -5,0001 1,350 1,3502 1,800 1,8003 1,500 5,406IRR 25% 25%Which of the following statements is correct?(a) Since the two projects have the same rate of return, they are indifferent.(b) Project A would be a better choice, as the required investment is smaller withthe same rate of return.(c) Project B would be a better choice as long as the investor’s MARR is lessthan 25%.(d) Project B is a better choice regardless of the investor’s MARR
The following information on two mutually exclusive projects is given below:n Project A Project B0 -3,000 -5,0001 1,350 1,3502 1,800 1,8003 1,500 5,406IRR 25% 25%Which of the following statements is correct?(a) Since the two projects have the same rate of return, they are indifferent.(b) Project A would be a better choice, as the required investment is smaller withthe same rate of return.(c) Project B would be a better choice as long as the investor’s MARR is lessthan 25%.(d) Project B is a better choice regardless of the investor’s MARR
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 15P
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Question
The following information on two mutually exclusive projects is given below:
n Project A Project B
0 -3,000 -5,000
1 1,350 1,350
2 1,800 1,800
3 1,500 5,406
IRR 25% 25%
Which of the following statements is correct?
(a) Since the two projects have the same
(b) Project A would be a better choice, as the required investment is smaller with
the same rate of return.
(c) Project B would be a better choice as long as the investor’s MARR is less
than 25%.
(d) Project B is a better choice regardless of the investor’s MARR
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