In the mutually exclusive projects, the 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 the above
Explanation
For mutually exclusive projects, only one can be chosen, so the financially preferred project is normally the one with the highest NPV. A lower or zero NPV would not be preferred when a higher positive 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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