Question: Projects A and B are mutually exclusive. Project A costs $10,000 and is expected to generate cash inflows of $4,000 for four years. Project B

Projects A and B are mutually exclusive. Project A costs $10,000 and is expected to generate cash inflows of $4,000 for four 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 percent. 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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