Commercial Pilot Licence (CPAER) – Canada · Question
A company is evaluating two mutually exclusive projects. Project A has an NPV of $50,000 and an IRR of 15%. Project B has an NPV of $75,000 and an IRR of 12%. Assuming no capital rationing, which project should the company choose?
For mutually exclusive projects, the Net Present Value (NPV) rule is preferred because it directly measures the increase in shareholder wealth. Project B has a
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Question: A company is evaluating two mutually exclusive projects. Project A has an NPV of $50,000 and an IRR of 15%. Project B has an NPV of $75,000 and an IRR of 12%. Assuming no capital rationing, which project should the company choose?
Answer options:
- Project A, because it has a higher IRR. ✅ Project B, because it has a higher NPV.
- Neither project should be chosen.
- Both projects should be chosen as they both have positive NPVs.
Correct answer: Project B, because it has a higher NPV.
Explanation: For mutually exclusive projects, the Net Present Value (NPV) rule is preferred because it directly measures the increase in shareholder wealth. Project B has a higher NPV, indicating it adds more value to the firm.
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Question explanations
- What is the minimum visibility required for a commercial VFR flight in Class D airspace at or below 3,000 feet
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- Scenario 1: A commercial pilot conducting an IFR flight in Canadian airspace must hold which of the following
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