Two projects being considered by a firm are mutually exclusive and have the following projected cash flows:
Year Project A Project B
0 -$100,000 -$100,000
1 $39,500 0
2 $39,500 0
3 $39,500 $133,000
Which project(s) should be accepted?
A) A, because it has a shorter payback period.
B) B, because it has a higher IRR.
C) Indifferent, because the projects have equal IRRs.
D) Include both in the capital budget, since the sum of the cash inflows exceeds the initial investment in both cases.
E) Choose neither, since their NPVs are negative.
B
You might also like to view...
A company is most likely doomed to failure in a foreign country if it__________
Fill in the blanks with correct word.
Before choosing which trade show to attend, a marketer should first consider which of the following?
A) location of the show B) type of press kit to create C) buying potential of attendees D) availability of sales personnel E) seasonal marketing needs