$3$ points

Sav

Question $9$

Alice is analyzing two mutually exclusive projects of similar size. Both projects have $5-$year lives. Project A has an NPV of $$18,389,$ a payback period of $2\mathrm{.}38$ years, an IRR of $15\mathrm{.}9$ percent, and a discount rate of $13\mathrm{.}6$ percent. Project B has an NPV of $$19,748,$ a payback period of $2\mathrm{.}69$ years, an IRR of $13\mathrm{.}4$ percent, and a discount rate of $12\mathrm{.}8$ percent. She can afford to fund either project, but not both. Alice should accept:

Project A because of its IRR.

both projects as they both have positive NPVs$.$

Project A because of its payback period.

neither project based on their IRRs.

Project B based on its NPV$.$