Multiple Choice
You are considering two independent projects with the same discount rate of 11 percent.Project A costs $284,700 and has cash flows of $75,900,$106,400,and $159,800 for Years 1 to 3,respectively.Project B costs $115,000,and has a cash flow of $50,000 a year for Years 1 to 3.You have sufficient funds to finance any decision you make.Which project or projects,if either,should you accept and why?
A) Project A; because it is the larger-sized project with a positive IRR
B) Project A; because it has the larger NPV
C) Neither project; because their NPVs are less than their initial costs
D) Project B; because its IRR exceeds the discount rate
E) Both projects; because their NPVs are both positive
Correct Answer:
Verified
Correct Answer:
Verified
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