Projects a and B Are Mutually Exclusive and Have an Initial

Projects A and B are mutually exclusive and have an initial cost of $82,000 each. Project A provides cash inflows of $34,000 a year for three years while Project B produces a cash inflow of $115,000 in Year 3. Which project(s) should be accepted if the discount rate is 11.7 percent? What if the discount rate is 13.5 percent?

A) Accept A at both discount rates
B) Accept A at 11.7 percent and neither at 13.5 percent
C) Accept B at both discount rates
D) Accept both at 11.7 percent and neither at 13.5 percent
E) Accept B at 11.7 percent and neither at 13.5 percent

Correct Answer:

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