Question: Project C and project D are mutually exclusive projects with conventional cashflows. The net present values (NPV) of the projects are calculated at the cost

Project C and project D are mutually exclusive projects with conventional cashflows. The net present values (NPV) of the projects are calculated at the cost of capital of 10% and 15% and provided below.

Cost of capital	NPV (Project C)	NPV (Project D)
10%	$109,366	$120,756
15%	$57,709	$50,837

Project C has an internal rate of return (IRR) of 22%. Project D has an internal rate of return (IRR) of 19%.

Three companies are interested in investing in the projects. The cost of capital of each company is given below:

Company	Cost of capital
Red	8%
Green	12%
Blue	17%

Provide your advice to each of the companies.

Company Red Should:

Company Green Should:

Company Blue Should:

Accept Project C only

Accept Project D only

Accept Both Projects

Accept Neither Projects

Require more information for decision-making

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