Question: Consider the following two mutually exclusive projects: Year Cash Flows (A) Cash Flows (B) 0 -$300,000 -$40000 1 20,000 19,000 2 50,000 12,000 3 50,000

Consider the following two mutually exclusive projects: Year Cash Flows (A)

Consider the following two mutually exclusive projects: Year Cash Flows (A) Cash Flows (B) 0 -$300,000 -$40000 1 20,000 19,000 2 50,000 12,000 3 50,000 18,000 4 390,000 10,500 Whichever project you choose, if any, you require a 15 percent return on your investment. 1. If you apply the discounted payback criterion, which investment will you choose? Why? 2. If you apply the IRR criterion, which investment will you choose? Why? Please show the work/formulas if you use excel

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