What decision should be made regarding each of the following two independent projects if the appropriate cost of capital is 12%?
A)Project A should be undertaken since it represents an investment that offers a rate of return that exceeds the cost of capital.
B)Both projects should be undertaken since both projects offer a return that is greater than the cost of capital.
C)Project B should be rejected since it represents a borrowing situation; therefore, the IRR can be interpreted as the cost of borrowing, and this exceeds the cost of capital.
D)Both B and C are correct choices.

Question

What decision should be made regarding each of the following two independent projects if the appropriate cost of capital is 12%? 
A)Project A should be undertaken since it represents an investment that offers a rate of return that exceeds the cost of capital. 
B)Both projects should be undertaken since both projects offer a return that is greater than the cost of capital. 
C)Project B should be rejected since it represents a borrowing situation; therefore, the IRR can be interpreted as the cost of borrowing, and this exceeds the cost of capital. 
D)Both B and C are correct choices.

Quizplus · Accepted Answer

The Answer of What decision should be made regarding each of the following two independent projects if the appropriate cost of capital is 12%? 
A)Project A should be undertaken since it represents an investment that offers a rate of return that exceeds the cost of capital. 
B)Both projects should be undertaken since both projects offer a return that is greater than the cost of capital. 
C)Project B should be rejected since it represents a borrowing situation; therefore, the IRR can be interpreted as the cost of borrowing, and this exceeds the cost of capital. 
D)Both B and C are correct choices.

What Decision Should Be Made Regarding Each of the Following