Question: Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow

Consider the following two projects: Project Year 0 Year 1 Year

Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate IA -100 40 50 60 N/A 0.11 B -73 30 30 30 30 0.11 Assume that projects A and B are mutually exclusive. The correct investment decision and the best rationale for that decision is to invest in project A, since NPVB NPVA invest in project B, since IRRB > IRRA invest in project B, since IRRB 0

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