Question: Consider the following two projects A and B. Assume that the appropriate discount rate for each project is 20%. Year CF for Project A CF

Consider the following two projects A and B. Assume that the appropriate discount rate for each project is 20%.

Year

CF for Project A

CF for Project B

- $100

150

500

- $2,500

1,500

2,000

2,500

(3) If projects A and B are independent projects, which project(s) should you accept based on your best capital budgeting criteria? Please explain your rationale.

(4) If projects A and B are mutually exclusive projects, which project(s) should you accept based on your best capital budgeting criteria? Please explain your rationale.

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