Question: A firm is considering two projects, Project A and Project B. The projects are independent and the cash flows are shown below: 0 1 2

A firm is considering two projects, Project A and Project B.

A firm is considering two projects, Project A and Project B. The projects are independent and the cash flows are shown below: 0 1 2 3 4 -50 20 20 15 YEAR PROJECT A PROJECT B 10 -60 25 15 25 12 If the cost of capital is 10%, what is the correct decision for the firm? Reject project B and accept project A. Accept project A and reject project B. Reject both projects. Accept project A and project B

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