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In the Case of Independent Projects

Question 101

Multiple Choice

In the case of independent projects:

A) the financial manager is responsible for choosing the average of these alternatives since only one can be chosen; selecting one project requires the selection of the other.
B) they are to be evaluated based on their expected effect on net income; all such projects that enhance net income should be included in the firm's capital budget.
C) the financial manager is responsible for choosing the best of these alternatives since only one can be chosen; selecting one project precludes the other from being undertaken.
D) they are to be evaluated based on their past effect on shareholder wealth; all such projects that enhance shareholder wealth should be included in the firm's capital budget.
E) none of the above statements are correct

Correct Answer: