Question: Crossborder, Inc. is considering Project A and Project B, which are two mutually exclusive projects with unequal lives. Project A is an eight-year project that
Crossborder, Inc. is considering Project A and Project B, which are two mutually exclusive projects with unequal lives. Project A is an eight-year project that has an initial cost of $240,000. Its future cash inflows for years I through 8 are the same at 556.500. Project B is a six-year project that has an initial cost of $260,000. Its future cash inflows for years through 6 are the same at $78,000. Crossborder uses a discount 1 rate of 15%. Which project(s), if any, should Crossborder accept? a) Neither, since Project A and B both have negative NPVs Ob) Project B, since it has an NPV greater than Project A c) Both projects have positive NPVS, so they should both be considered. d) Project A, since it has an NPV greater than Project B
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