Question: Projects A and B are mutually exclusive. Project A costs $20,000 and is expected to generate cash inflows of $7,500 for 4 years. Project B
Projects A and B are mutually exclusive. Project A costs $20,000 and is expected to generate cash inflows of $7,500 for 4 years. Project B costs $10,000 and is expected to generate a single cash flow in year 4 of $20,000. The cost of capital is 12%. Which project would you accept and why? A. Project B because it has the higher NPV. B. Project B because it has the higher IRR. C. Project A because it has the higher NPV. D. Project A because it has the higher IRR.
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