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 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate A -- 100 40 50 60 N/A 0.2 --73 30 30 30 30 0.2 Assume that projects A and B are mutually exclusive. The correct investment decision and the best rationale for that decision is to B O A. invest in project B, since IRRB > IRRA O B. invest in project A, since NPVA>0. O c. invest in project B, since NPVB > NPVA OD. invest in project A, since NPVA NPVB
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
