Assume that projects A and B are mutually exclusive. The correct investment decision and the best rationale for that decision is to ________
Consider the following two projects:
Project
Year 0
Cash Flow Year 1
Cash Flow Year 2
Cash Flow Year 3
Cash Flow Year 4
Cash Flow Discount
Rate
A -100 40 50 60 N/A 0.11
B -73 30 30 30 30 0.11
A) invest in project A, since NPVB < NPVA
B) invest in project B, since IRRB > IRRA
C) invest in project B, since NPVB > NPVA
D) invest in project A, since NPVA > 0
Answer: A
Business
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