Quorex is evaluating two mutually exclusive projects. Project A has a net investment of $$50,000$ and net cash flows over a six$-$year period of $$13,000$ per year $($NOTE: that project requires a reinvestment with the same cost and cash flow for another six years$).$ Project B has a net investment of $$48,500,$ but its net cash flows of $$8,740$ per year will occur over a $12-$year period. If Quorex has a cost of capital of $14\%$ for these projects, which project, if either, should be chosen, and what is its NPV$?$

Question $8$ Answer

a$.$

Project A $-$ with an NPV of $$23,583\mathrm{.}80$

b$.$

Neither of these projects

c$.$

Project B $-$ with an NPV of $$970\mathrm{.}95$

d$.$

Project A $-$ with an NPV of $$885\mathrm{.}50$