Author Question: When two mutually exclusive projects are considered, the NPV calculations and the IRR calculations ... (Read 37 times)

Pea0909berry

  • Hero Member
  • *****
  • Posts: 573
When two mutually exclusive projects are considered, the NPV calculations and the IRR calculations may, under certain circumstances, give conflicting recommendations as to which project to accept.
 
  The reason for this result is that in the NPV calculation, cash inflows are assumed to be reinvested at the cost of capital, while in the IRR solution, reinvestment takes place at A) the hurdle rate.
  B) the accounting rate of return.
  C) the prime rate.
  D) the project's internal rate of return.

Question 2

The perfect substitution of two inputs implies that
 
  A) two inputs can be substituted at a ratio of 1 to 1.
  B) one input can be substituted for another up to some point.
  C) two inputs can be substituted at some constant ratio.
  D) one input can be substituted for another.



kristenb95

  • Sr. Member
  • ****
  • Posts: 318
Answer to Question 1

D

Answer to Question 2

C



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

The strongest synthetic topical retinoid drug available, tazarotene, is used to treat sun-damaged skin, acne, and psoriasis.

Did you know?

All patients with hyperparathyroidism will develop osteoporosis. The parathyroid glands maintain blood calcium within the normal range. All patients with this disease will continue to lose calcium from their bones every day, and there is no way to prevent the development of osteoporosis as a result.

Did you know?

Bisphosphonates were first developed in the nineteenth century. They were first investigated for use in disorders of bone metabolism in the 1960s. They are now used clinically for the treatment of osteoporosis, Paget's disease, bone metastasis, multiple myeloma, and other conditions that feature bone fragility.

Did you know?

The largest baby ever born weighed more than 23 pounds but died just 11 hours after his birth in 1879. The largest surviving baby was born in October 2009 in Sumatra, Indonesia, and weighed an astounding 19.2 pounds at birth.

Did you know?

Side effects from substance abuse include nausea, dehydration, reduced productivitiy, and dependence. Though these effects usually worsen over time, the constant need for the substance often overcomes rational thinking.

For a complete list of videos, visit our video library