Question: Considering Two Mutually Exclusive Projects: A financial manager is considering a loan to undertake the following two mutually exclusive projects. To compensate for the costs

Considering Two Mutually Exclusive Projects:

A financial manager is considering a loan to undertake the following two mutually exclusive projects. To compensate for the costs associated with the loan, the firm requires a 15% return on either of these investments.

If management needs to recover the initial $70,000, in a maximum of two years and six months, to avoid any penalties on the loan, what project should the company accept?

Year	CF Project A	Project B
0	(-$70,000)	(-$70,000)
1	$40,000	$26,000
2	$24,000	$26,000
3	$20,000	$26,000
4	$14,000	$26,000

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