Choose the most accurate statement: If these projects are mutually exclusive, which project should be chosen by the CEO of the

Question

3 years ago

5

Choose the most accurate statement: If these projects are mutually exclusive, which project should be chosen by the CEO of the

firm if the CEO’s primary objective is to maximize shareholder value? Assume the opportunity cost of capital is 10% for both projects

Business

1 answer:

serg [7] · Answer 1 · 2021-12-05T20:56:58+03:00

Answer:

Project A is the better option than Project B.

Explanation:

The NPV of the project will decide which is the option with greater value to shareholders. As we can see that the NPV of Project A at 10% cost of capital is greater than the NPV of Project B at the same 10% cost of capital. So the best option here is Project A as is more in value than project B. Hence the CEO must select Project A.