Assume that a firm has accurately calculated the net cash flows relating to two mutua lly
exclusive investment proposals. If the net present value of both proposals exceed zero and
the firm is not under the constraint of capital rationing, then the firm should .
A. calculate the IRRs of these investments to be certain that the IRRs are greater than
the cost of capital
B. compare the profitability index of these investments to those of other possible
investments
C. calculate the payback periods to make certain that the initial cash outlays can be
recovered within a appropriate period of time
D. accept the proposal that has the largest NPV since the goal of the firm is to
maximize shareholder wealth and, since the projects are mutually exclusive, we
can only take one
exclusive investment proposals. If the net present value of both proposals exceed zero and
the firm is not under the constraint of capital rationing, then the firm should .
A. calculate the IRRs of these investments to be certain that the IRRs are greater than
the cost of capital
B. compare the profitability index of these investments to those of other possible
investments
C. calculate the payback periods to make certain that the initial cash outlays can be
recovered within a appropriate period of time
D. accept the proposal that has the largest NPV since the goal of the firm is to
maximize shareholder wealth and, since the projects are mutually exclusive, we
can only take one