Which one of the following is the best example of two mutually exclusive projects? A. building a retail store that is attached to a wholesale outlet B. using an empty warehouse to store both raw materials and finished goods C. promoting two products during the same television commercial D. waiting until a machine finishes molding Product A before being able to mold Product B

12. Assume we require an average accounting return of 12%. A project has an initial cost of $35,000 and a 3-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is $1,200, $2,300, and $1,800 a year for the next 3 years, respectively. Do we accept or reject the project, why? A. Accept, AAR is 15.14 percent B. Accept, AAR is 10.10 percent C. Reject, AAR is 15. 14 percent D. Reject, AAR is 10.10 percent E. None of the above

13. Sams Kitchen Products has a required payback period of three years for all of its projects. Currently, the firm is analyzing two independent projects. Project A has an expected payback period of 2.6 years and a net present value of $3,800. Project B has an expected payback period of 1.5 years with a net present value of $500. Which project(s) should be accepted based on the payback period decision rule? A. Project A only B. Project B only C. Both A and B D. Neither A nor B

14. Under which of the following situations, you can use both NPV and IRR rules to make the project decision? A. making decision to either build a department building or a gas station on a small corner lot B. making decision on a project with a hump-shaped NPV profile C. making decision on a chemical-product project where there is a huge cost involved in clearing up the wastes when shutting down the project. D. making decision on whether to open an ice-cream shop

15. Which of the following is the ultimate decision rule for a project analysis? A. net present value rule B. internal rate of return rule C. profitability index rule D. average accounting return rule