In mutually exclusive projects, project which is selected for comparison with others must have____________?
Correct answer: A. Higher net present value
- A. Higher net present value
- B. Lower net present value
- C. Zero net present value
- D. All of above
Explanation
Mutually exclusive projects cannot all be accepted, so they are compared and the project with the highest positive NPV is normally selected. A lower, zero, or negative NPV is not preferred when a superior alternative exists.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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