Two mutually exclusive projects are being considered whose cost of capital is 12% each and have the following projected
Posted: Sun Jun 05, 2022 7:03 am
Two mutually exclusive projects are being considered whose cost of capital is 12% each and have the following projected cash flows:
Year Project A ($) Project B ($)
0 -50,000 -50,000
1 15,625 0
2 15,625 0
3 15,625 0
4 15,625 0
5 15,625 99,500
Select one:
a. Project B, because it has the highest IRR
b. Project A, because it has the highest NPV
c. Project A, because it has the highest IRR
d. Project B, because it has the highest NPV
e. Neither, since both have IRRs lower than their respective NPVs
Year Project A ($) Project B ($)
0 -50,000 -50,000
1 15,625 0
2 15,625 0
3 15,625 0
4 15,625 0
5 15,625 99,500
Select one:
a. Project B, because it has the highest IRR
b. Project A, because it has the highest NPV
c. Project A, because it has the highest IRR
d. Project B, because it has the highest NPV
e. Neither, since both have IRRs lower than their respective NPVs