Project Deceptacon and Project Autobot are two mutually exclusive financing projects with equal risk that are competing

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Project Deceptacon And Project Autobot Are Two Mutually Exclusive Financing Projects With Equal Risk That Are Competing 1 (71.89 KiB) Viewed 68 times

Project Deceptacon and Project Autobot are two mutually exclusive financing projects with equal risk that are competing to use the same finite resource of energon (a scarce natural resource). You have already estimated that both projects will have non- negative internal rates of return (IRR). However, you have not determined the appropriate discount rate at this time. So far, all that you have determined is that if the discount rate was exactly 24% per year, that both projects will share the same positive net present value (NPV). Other than this, there are no other discount rates at which they would share the same NPV. Project Deceptacon has a lower IRR than Project Autobot. Both projects commence with and initial up-front cash inflow, two more years of additional quarterly cash inflows, and then followed in all future years by a series of perpetual quarterly cash outflows. Which of the following statements is most correct? O a. At any positive discount rate below 24% p.a., Deceptacon should be accepted and Autobot should be rejected. O b. At any positive discount rate above 24% p.a., Deceptacon should be accepted and Autobot should be rejected. Oc. At any positive discount rate above 24% p.a, Autobot should be accepted and Deceptacon should be rejected. O d. At any positive discount rate below 24% p.a., Autobot should be accepted and Deceptacon should be rejected. Oe. More than one of the other answers are correct.