Question: Interstate Appliance Inc. is considering the following two mutually exclusive projects. Projected cash flows for these ventures are as follows: Plan A IO CF1 CF2

Interstate Appliance Inc. is considering the following two mutually exclusive projects.

Interstate Appliance Inc. is considering the following two mutually exclusive projects. Projected cash flows for these ventures are as follows: Plan A IO CF1 CF2 CF3 CF4 CF5 3,600,000 0 0 0 0 7,000,000 Plan B 10 CF1 CF2 CF3 CF4 CF5 3,500,000 1,000,000 0 2,000,000 2,000,000 1,000,000 If Interstate Appliance has a 12% cost of capital, what decision should be made regarding the projects above? A and B are indifferent. Accept plan B. O Accept plan A. Reject both plans A and B

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