Question

Question Help * As chief financial officer, you are responsibe for weighing the financial pros and cons of the many investment opportunities developed by your company's research and development division. You are currently evaluating two competing 15-year projects that differ in several ways. Relative to your firm's current EPS, the first project is expected to generate above-average EPS during the first 5 years, average EPS during the second 5 years,and then below-average EPS in the last 5 years. The years second project is expected to generate below-average EPS during the first 5 years, average EPS in the second 5 years, and then well-above-average EPS in the last 5 rked is the choice obvious i you expect that the second investment will eslit i a larger overalil carnings increase? Given the goal of the frm, what issues willyou consider before making a final decision? is the choice obvious if you expect that the second Investment will i lrer overall anings increase? (Select the best answer below) ts: No The firm cannot earn a return on funds it receives, therefore the receipt of funds, whether sooner or later, w禔not affect the choice. below-average return in the last 5 years, while the second project generates well-above-average returns in the same period above-average return in the frst 5 years, while the second project generates below-average returns in the same period 0 A. O B. Yes. The frm can earn a return on funds it recelves, therefore the receipt of funds is preferred later rather than sooner. The first project generates a 。c. No The firm can earn a return on funds t receives therefore the receipt of funds is preferred sooner rather than late. The OD. Yes. The fim can ean a retun on funds iR recelves, therefore, the project that earns the larger overall earnings increase is the best choice rst project generates an stion

Answer 1

1) Answer: D

Any firm will invest in a project only if they get profit which means the returns are High. So in second project the overall earnings are high which means the firm will get more money in return. Thus they choose second project.

2) Answer: A

In a sole proprietorship firm the owner will have unlimited liability which means the creditor can claim the unpaid debts from his personal assets. The owner is personally liable and responsible for the payment.

So here Ms. Harper is personally liable for repayment to creditors.