Question

Your firm's CFO presents you with two capital budgeting analyses: one that involves buying a new delivery truck to replace the existing truck and one that involves the purchase of a three-ton metal stamping press to replace the existing press on the plant floor. This is an example of a decision involving _______________.

A) mutually exclusive projects
B) crossover projects
C) payback projects
D) independent projects
E) working capital projects

Answer 1

The CFO's presentation regarding the choice between a new delivery truck and a metal stamping press illustrates a decision involving mutually exclusive projects, where only one project can be chosen. Option E is correct.

Step-by-step explanation:

The decision between buying a new delivery truck and purchasing a three-ton metal stamping press represents a choice involving mutually exclusive projects. These are projects where only one can be chosen, as selecting one option precludes the possibility of going ahead with the other.

Factors like cost, potential returns, efficiency, and alignment with the company's strategic goals will play a crucial role in deciding which project to undertake.