Based on the following scenario, which project do you support if you make a decision based on the RONA $($or IRR, or NPV$)?$

Project A requires an initial investment $($or you may say, $$cash outflow$)$ of $$525,000$ and is expected to generate the following net cash inflows:

Year $1$: $$120,000$

Year $2$: $$110,000$

Year $3$: $$120,000$

Year $4$: $$110,000$

Year $5$: $$120,000$

Year $6$ : $$130,000$

The expected rate of return is $5\%.$

Project B also requires an initial investment $($or you may say, $$cash outflow$)$ of $$525,000$ and is expected to generate the following net cash inflows:

Year $1$: $$300,000$

Year $2$: $$200,000$

Year $3$: $$90,000$

Year $4$: $$0$

Year $5$: $$0$

Year $6$ : $$0$

The expected rate of return is $5\%.$

Group of answer choices

Project A

Project B