Question: Ball Corporation is currently evaluating two mutually exclusive projects which have the following net cash flows: A B 0 -$5,000 -$10,000 1 3,000 3,500 2

Ball Corporation is currently evaluating two mutually exclusive projects which have the following net cash flows:

A B

0 -$5,000 -$10,000

1 3,000 3,500

2 3,000 3,500

3 3,000 3,500

4 ___________________3500

5______________________3500

6 3,500

Both projects have a cost of capital of 10 percent. Totally new equipment must be procured in 6 years, but Project A would be replicated if it were chosen. Which project should Ball select, and why?

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