Question: Consider the two mutually exclusive projects below. What is the appropriate investment decision? Project A Project B Payback 3.4 4.4 NPV - 2.79 - 1.56

Consider the two mutually exclusive projects below. What is the appropriate investment decision?

Project A

Project B

Payback

3.4

4.4

NPV

- 2.79

- 1.56

IRR

18.56

10.67

Select one:

a.

Accept B because of the higher NPV (negative value that is smaller in magnitude).

b.

Accept A because of the higher IRR.

c.

Reject both projects because both NPVs are negative.

d.

Accept A because of the shorter payback.

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