Fritz Walther, the CEO of Carl Walther Sportwaffen GmbH, is choosing between two mutually exclusive projects: (1 ) the Walther PBJ; and (2 ) the Walther PPK. Both projects involve an investment of $100,000

The operating cash flows for each project are shown in the table. The opportunity cost of capital is 10%. The PBJ project has an IRR of 11.65% and the PPK project has an IRR of 12.27%. Which project should Fritz choose (and why)?

Year PBJ PPK
0 -100,000 -100,000
1 40,000 90,000
2 80,000 25,000

A) Choose the PPK project because its IRR is greater.
B) Choose the PPK because its NPV is higher.
C) Choose the PBJ because its NPV is higher.
D) Choose the PPK because it generates more operating cash flows.
E) Choose either because they both have the same NPV.

E