Aspen Industries is considering two mutually exclusive projects with the following

projected cash flows: Project A. Project B

Initial Investment. -R635 000. -R1 300 000

Annual Cash flows.

Year 1. R120 000. R344 000

Year 2. R200 000. R300 000

Year 3. R90 000. R200 000

Year 4. R200 000. R200 000

Year 5. R120 000. R200 000

Year 6. R180 000. R300 000

Year'7. R180 000. R400 000

Year 8. R90 000. R550 000

Based on the above cash flows and a cost of capital (discount rate) of 10%, which of

the following statements is the most accurate:

(a)If the company uses IRR only in evaluating projects, project B would be selected.

(b)Project A would be selected if the company uses IRR and payback period for the

evaluation of projects.

(c)Project B would be selected if the company uses NPV and IRR for the evaluation of

projects.

(d)Project A would be selected if the company uses NPV for the evaluation of projects.

(e)None of the above