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Financial Forensics · Quiz 2 · 6 Aug 2023 · May 2023 term

Question 6: You are considering two independent projects that have di…

Question 6

+1 markOne correct option

You are considering two independent projects that have differing requirements. Project A has a required return of 12 percent compared to Project B’s required return of 13.5 percent. Project A costs ₹75,000 and has cash flows of ₹21,000, ₹49,000, and ₹12,000 for Years 1 to 3, respectively. Project B has an initial cost of ₹70,000 and cash flows of ₹15,000, ₹18,000, and ₹41,000 for Years 1 to 3, respectively. Based on the NPV, you should:

  1. A

    accept both Project A and Project B.

  2. B

    accept Project A and reject Project B.

  3. C

    accept Project B and reject Project A.

  4. D

    reject both Project A and Project B.

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Correct answer

  • D

    reject both Project A and Project B.

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Question 6 of 25 in the IIT Madras BS Financial Forensics (Financial Forensics) Quiz 2 paper sat on 6 Aug 2023, in the May 2023 term (IIT M DEGREE AN3 EXAM QPE3 06 Aug 2023). It carries 1 mark.

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