You have a choice between two mutually exclusive investments. If you require a 14% return, which investment should you choose?
A) Project B, because it has a smaller initial investment.
B) Project A, because it has a higher NPV.
C) Either one, because they have the same profitability indexes.
D) Project B, because it has the higher internal rate of return.
E) Project B, because it pays back faster.

Question

You have a choice between two mutually exclusive investments. If you require a 14% return, which investment should you choose? 
A) Project B, because it has a smaller initial investment. 
B) Project A, because it has a higher NPV. 
C) Either one, because they have the same profitability indexes. 
D) Project B, because it has the higher internal rate of return. 
E) Project B, because it pays back faster.

Quizplus · Accepted Answer

The Answer of You have a choice between two mutually exclusive investments. If you require a 14% return, which investment should you choose? 
A) Project B, because it has a smaller initial investment. 
B) Project A, because it has a higher NPV. 
C) Either one, because they have the same profitability indexes. 
D) Project B, because it has the higher internal rate of return. 
E) Project B, because it pays back faster.

You Have a Choice Between Two Mutually Exclusive Investments