Question: Consider the following two mutually exclusive projects: Cash Flow Project A Project B Year 1,000,000 -S 1,000,000 75,000 335,000 150,000 300,000 2 3 300,000 250,000

Consider the following two mutually exclusive projects: Cash Flow Project A Project B Year 1,000,000 -S 1,000,000 75,000 335,000 150,000 300,000 2 3 300,000 250,000 4 500,000 250,000 250,000 150,000 6 250,000 75,000 You require a 10% return on your investment. a) b) C) If you apply the payback criterion, which investment will you choose? Why? If you apply the NPV criterion, which investment will you choose? Why? If you apply the IRR criterion, which investment will you choose? Why? Which project will you finally choose? Why

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