Use the following data to answer Questions 18 through 20. Dr. Nassar , a CFA, has gathered the following data about two models that AL-Khatib Machinery Inc. is planning to build. Assume that the cost of capital is 12%. Model W Model Y Initial cost $15,000 $20,000 Life 5 years 4 years Cash inflows $5,000/year $7,500/year

18. Which of the following statements about model W is most accurate? *

A. The discounted payback period is 3 years.

B. The IRR of the model is 19.86%; accept the project.

C. The NPV of the model is +$3,024; accept the project.

D. (A), (B), & (C)

E. (B) & (C)

F. None of the above

19. If the projects are independent, the company should: *

A. Accept Model "W" and reject Model "Y".

B. Reject Model "W" and accept Model "Y".

C. Accept both models.

D. Reject both models.

E. None of the above

20. If the projects are mutually exclusive, the company should: *

A. Reject both models.

B. Accept Model "W" and reject Model "Y".

C. Reject Model "W" and accept Model "Y".

D. Accept both models.

E. None of the above