The ﬁnal decision on which one of two mutually exclusive projects to accept ultimately depends upon the:
A) Initial cost of each project.
B) Required discount rate.
C) Total cash inﬂows of each project.
D) Assigned payback period of each project.
E) Length of each project's life.

Question

Quizplus · Accepted Answer

The required discount rate is used to calculate the net present value (NPV) of each project. The project with the higher NPV should be accepted. Therefore, the final decision on which project to accept ultimately depends upon the required discount rate.

The ﬁNal Decision on Which One of Two Mutually Exclusive