Project S requires an initial outlay at t = 0 of $11,000, and its expected cash flows would be $6,500 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $25,000, and its expected cash flows would be $14,750 per year for 5 years. If both projects have a WACC of 14%, which project would you recommend?

Select the correct answer.

a. Neither Project S nor L, since each project's NPV

b. Project S, since the NPVS > NPVL.

c. Project L, since the NPVL > NPVS.

d. Both Projects S and L, since both projects have IRR's > 0.

e. Both Projects S and L, since both projects have NPV's > 0

8. Problem 11.11 (Capital Budgeting Criteria: Mutually Exclusive Projects) Project S requires an initial outlay at t=0 of $11,000, and its expected cash flows would be $6,500 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t=0 of $25,000, and its expected cash flows would be $14,750 per year for 5 years. If both projects have a WACC of 14%, which project would you recommend? Select the correct answer. a. Neither Project S nor L, since each project's NPV NSP. C. Project L, since the NPVL>NNP. d. Both Projects S and L, since both projects have IRR's >0. e. Both Projects S and L, since both projects have NPV's >0