Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Discount C/F C/F C/F Alpha -79 20 Beta -80 25 20 225 C/F C/F C/F C/F C/F Rate 30 25 22 35 40 N/A N/A 17% 25 25 25 25 14% Assume that projects Alpha and Beta are mutually exclusive. The correct investment decision and the best rationale for that decision is to O A. invest in project Beta, since NPV > 0. Beta OB. invest in project Beta, since IRR IRRA C. invest in project Beta, since NPV > NPV Beta > 0. Alpha < NPV Beta Alpha OD. invest in project Alpha, since NPV

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Consider the following two projects:
Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Discount
C/F
C/F C/F
Alpha -79
20
Beta -80
25
20
225
C/F
C/F
C/F
C/F
C/F
Rate
30
25
22
35
40
N/A
N/A
17%
25
25
25
25
14%
Assume that projects Alpha and Beta are mutually exclusive. The correct investment decision and the best rationale for that decision is to
O A. invest in project Beta, since NPV
> 0.
Beta
OB. invest in project Beta, since IRR IRRA
C. invest in project Beta, since NPV
> NPV
Beta
> 0.
Alpha
< NPV
Beta
Alpha
OD. invest in project Alpha, since NPV
Transcribed Image Text:Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Discount C/F C/F C/F Alpha -79 20 Beta -80 25 20 225 C/F C/F C/F C/F C/F Rate 30 25 22 35 40 N/A N/A 17% 25 25 25 25 14% Assume that projects Alpha and Beta are mutually exclusive. The correct investment decision and the best rationale for that decision is to O A. invest in project Beta, since NPV > 0. Beta OB. invest in project Beta, since IRR IRRA C. invest in project Beta, since NPV > NPV Beta > 0. Alpha < NPV Beta Alpha OD. invest in project Alpha, since NPV
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