You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value. Required rate of return 10% 13%
Required payback period 2.0 years 2.0 years
Based upon the internal rate of return (IRR) and the information provided in the problem,you should:
A) accept both project A and project B.
B) reject both project A and project B.
C) accept project A and reject project B.
D) accept project B and reject project A.
E) ignore the IRR rule and use another method of analysis.

Question

You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value.  Required rate of return 10% 13%
Required payback period 2.0 years 2.0 years
Based upon the internal rate of return (IRR) and the information provided in the problem,you should:
A) accept both project A and project B. 
B) reject both project A and project B. 
C) accept project A and reject project B. 
D) accept project B and reject project A. 
E) ignore the IRR rule and use another method of analysis.

Quizplus · Accepted Answer

The Answer of You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value.  Required rate of return 10% 13%
Required payback period 2.0 years 2.0 years
Based upon the internal rate of return (IRR) and the information provided in the problem,you should:
A) accept both project A and project B. 
B) reject both project A and project B. 
C) accept project A and reject project B. 
D) accept project B and reject project A. 
E) ignore the IRR rule and use another method of analysis.

You Are Considering the Following Two Mutually Exclusive Projects