Question $4(1$ point$)$

You are assessing two independent projects using the NPV technique. You note that

the cash flows of Project A are as follows: Year $0=-$$$1,000,$ Year $1=$$$500,$ Year $2=$

$$400,$ Year $3=$$$300,$ Year $4=$$$100.$ The cash flows of Project $B$ are as follows: Year

$0=-$$$1,000,$ Year $1=$$$150,$ Year $2=$$$250,$ Year $3=$$$350,$ Year $4=$$$550.$ If the

discount rate is $9\mathrm{.}5\%$ for both projects, which of the following best describes what

you should do$?$

You should proceed with both projects since both are NPV positive and they are

independent.

You should only proceed with Project A even though both projects are NPV

positive. However you should choose the project with the highest NPV since

they are independent.

You should only proceed with Project B even though both projects are NPV

positive. However you should choose the project with the highest NPV since

they are independent.

You should only proceed with Project A because it is NPV positive and Project B

is NPV negative.