Project A and Project B are mutually exclusive projects. Project A's net present value (NPV) is 4
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Project A and Project B are mutually exclusive projects. Project A's net present value (NPV) is 4 million EUR, the Internal Rate of Return (IRR) of Project A is 12% and the payback period is 5 years. Project B’s NPV is 6 million EUR, the IRR of Project B is 10% and the payback period is 10 years. Suppose that there is no budget constraint for the implementer of the Project. Which of the following statements is true?
- Project A should be chosen because it has higher IRR
- Project B should be chosen because it has longer payback period
- Project A should be chosen because it has shorter payback period
- Project B should be chosen because it has greater NPV
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