Question 25 (2 points) 1. Sarah is evaluating two mutually exclusive capital budgeting projects that have the following characteristics: Year 0 1 2 IRR 4 Cash Flows Project Q $(4,000) 0 5,000 11.8% Project R $(4,000) 3,500 1,100 12.0% If the firm's required rate of return (r) is 8 percent, which project should be purchased? Both projects should be purchased, because the IRRs for both projects exceed the firm's required rate of return. O Neither project should be accepted, because the IRRs for both projects exceed the firm's required rate of return. Project Q should be accepted, because its net present value (NPV) is higher than Project R's NPV. Project R should be accepted, because its net present value (NPV) is higher than Project Q's NPV.

1. Sarab is evaluating two mutually exclusive capital budgeting projects that have the following characteristics: If the firm's required rate of return ( r ) is 8 percent, which project should be purchased? Both projects should be purchased, because the IRRs for both projects exceed the firm's required rate of refurn. Neither project should be accepted, because the IRRs for both projects exceed the firm's required rate of return. Project Q should be accepted, because its net present value (NPV) is higher than Project R's NPV. Project R should be accepted, because its net present value (NPV) is higher than Project Q's NPV