Version A 29, Assume a required return of 5% on each project, which project(s) should you accept and what is the best reason for that decision if the projects are mutually exclusive? A. Both projects because they have positive NPVs. B. Project A, because it has the higher IRR. C. Project B, because it has the higher IRR. D. Project A, because it has the higher NPV E. Project B, because it has the higher NPV 30. Assume a required return of 5% on each project, which project(s) should you accept and what is the best reason for that decision if the projects are indspendent? A. Both projects because they have positive NPVs B. Project A, because it has the higher IRR. C. Project B, because it has the higher IRR D. Project A, because it has the higher NPV E. Project B, because it has the higher NPV 31. You are advising Peter who is attempting to decide whether or not to drop one of the college courses he is currently enrolled in. If he drops the course, he will forfeit half of the money spent on tuition. If he stays in the class, he will have to give up his part-time job. His textbook is being replaced by a new edition, so is worthless at this time. Which of the following conclusions is consistent with capital budgeting principles? I. Remaining in the class incurs an opportunity cost. II. The entire tuition is irrelevant because it is a sunk cost. III. The cost of the book is a sunk cost. A. I only B. I and II only C. I and III only D. Il and III only E. I, II, and III 32. Net working capital is typically an expense at the beginning of a project and an equal inflow at the end, thus having no impact on NPV A. True B. False