The final decision on which one of two mutually exclusive projects to accept ultimately depends upon which one of the following?
A) Initial cost of each project
B) Timing of the cash inflows
C) Total cash inflows of each project
D) Net present value
E) Length of each project's life

Question

The final decision on which one of two mutually exclusive projects to accept ultimately depends upon which one of the following? 
A) Initial cost of each project 
B) Timing of the cash inflows 
C) Total cash inflows of each project 
D) Net present value 
E) Length of each project's life

Quizplus · Accepted Answer

The final decision on which project to accept depends on the net present value (NPV). NPV is calculated by subtracting the initial investment from the present value of all expected cash inflows. The project with a higher NPV is more beneficial as it generates more cash than the initial investment. Therefore, the project with a higher NPV should be accepted.

The Final Decision on Which One of Two Mutually Exclusive