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If the CEO can only invest in one project, which project maximizes economic profit? Project A Proiect B Project C Project D If the projects
- If the CEO can only invest in one project, which project maximizes economic profit?
- Project A
- Proiect B
- Project C
- Project D
- If the projects are mutually exclusive and the CEO can invest in as many projects as she wants, in which one(s) maximize economic profit?
- No projects
- Project A
- Proiect B
- Project C
- Project D
- Projects A,. B
- Projects A, C
- Projects A, D
- Projects B, C
- Projects B, D
- Projects C, D
- Projects A. B. C
- Projects A, B. D
- Projects A, C, D
- Projects B, C, D
- Projects A, B, C, D
- Suppose the CEO receives a bonus based on the return on capital (i.e., accounting profit divided by invested capital). In which project(s) will she invest?
- No projects
- Project A
- Proiect B
- Project C
- Project D
- Projects A,. B
- Projects A, C
- Projects A, D
- Projects B, C
- Projects B, D
- Projects C, D
- Projects A. B. C
- Projects A, B. D
- Projects A, C, D
- Projects B, C, D
- Projects A, B, C, D
For next three questions (Q23-25), suppose a CEO is considering four potential investment projects that differ on both their expected profitability and their initial capital requirements, as shown in the following table. Assume further that the relevant cost of invested capital is 15% for each project
- Project A
- Proiect B
- Project C
- Project D
- No projects
- Project A
- Proiect B
- Project C
- Project D
- Projects A,. B
- Projects A, C
- Projects A, D
- Projects B, C
- Projects B, D
- Projects C, D
- Projects A. B. C
- Projects A, B. D
- Projects A, C, D
- Projects B, C, D
- Projects A, B, C, D
- No projects
- Project A
- Proiect B
- Project C
- Project D
- Projects A,. B
- Projects A, C
- Projects A, D
- Projects B, C
- Projects B, D
- Projects C, D
- Projects A. B. C
- Projects A, B. D
- Projects A, C, D
- Projects B, C, D
- Projects A, B, C, D
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