Question: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) B) 0 -$50,000 -$25,000 $25,000 $10,000 $10,000 $10,000 $10,000 $10,000 $20,000


Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) "B) 0 -$50,000 -$25,000 $25,000 $10,000 $10,000 $10,000 $10,000 $10,000 $20,000 T $5,000 Whichever project you choose, if any, you require a 10 percent return on your investment. If you apply the payback criterion, you will choose investment , if you apply the NPV criterion, you will choose investment ; if you apply the IRR criterion, you will choose investment ; if you choose the profitability index criterion, you will choose investment . Based on your first four answers, which project will you finally choose? O A; A; A; A; A O A; B; A; A; A OB; A; A; A; A O A; B; B; B; B OB; B; B; B; B You are considering the following two mutually exclusive projects. Which project should be accepted if the discount rate is 12%? Year Project A Project B -$42,000 -$42,000 1 14,000 14,000 30,000 30,000 10,000 14,000 O Project A because the crossover point is higher than the discount rate O Project A because the crossover point is lower than the discount rate O Project B because the crossover point is higher than the discount rate O Project B because the crossover point is lower than the discount rate O Either project A or B because you are indifferent
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