Question
The following information is relevant for questions 48-50 Project NPV IRR Payback Period A $10.1 million 3.88% 5.3 years B $2.6 million 2.13% 4.3 years
The following information is relevant for questions 48-50
| Project | NPV | IRR | Payback Period |
| A | $10.1 million | 3.88% | 5.3 years |
| B | $2.6 million | 2.13% | 4.3 years |
| Project | NPV | IRR | Payback Period |
| A | $10.1 million | 3.88% | 5.3 years |
| B | $2.6 million | 2.13% | 4.3 years |
48. Assuming that Project A and B are independent, what would be the correct decision using NPV if each project requires the same initial outlay of $100 million?
Project A
Project B
Both Projects
Reject both
Additional information needed
Answer:
49. Assuming that Project A and B are mutually exclusive, what would be the correct decision using the payback decision rule if payback cutoff period is 4 years?
Project A
Project B
Both Projects
Reject both
Additional information needed
Answer:
50. Assuming that Project A and B are mutually exclusive, which recommendation may be the most reasonable for a person trained in Finance?
Project A because of the Net Present Value Figures.
Project B because of the Net Present Value Figures
Project A because of the Payback Period
Project B because of the Payback Period
Both A and B as long as their IRRs are greater than WACC
Answer:
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Public Finance In A Changing World
Authors: Peter Birch Sorensen
1998th Edition
0333682211, 978-0333682210
