Attempts $$

Keep the Highest $/1$

$3.$ Problem $11\mathrm{.}11($Capital Budgeting Criteria: Mutually Exclusive Projects$)$

Project $S$ requires an initial outlay at $t=0$ of $$11,000,$ and its expected cash flows would be $$6,500$ per year for $5$ years. Mutually exclusive Project $L$ requires an initial outlay at $t=0$ of $$30,500,$ and its expected cash flows would be $$7,600$ per year for $5$ years. If both projects have a WACC of $13\%,$ which project would you recommend?

Select the correct answer.

a$.$ Project S$,$ because the NPVs $>$ NPVL$.$

b$.$ Both Projects $S$ and $L,$ because both projects have IRR's $>0.$

$2.$ Neither Project S nor L$,$ because each project's NPV

d$.$ Both Projects $S$ and L$,$ because both projects have NPV$\text{'}$s $>0.$

e$.$ Project L$,$ because the NPVL $>$ NPV$.$

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