Question: SS Inc. is considering two projects. Assuming that Projects Aliga and Bogata are mutually exclusive , which recommendation may be the most reasonable for a
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SS Inc. is considering two projects. Assuming that Projects Aliga and Bogata are mutually exclusive, which recommendation may be the most reasonable for a person trained in Finance if the WACC is 5%?
Project
NPV
IRR
Payback Period
Aliga
$4.5 million
4.66%
3.6 years
Bogata
$3.8 million
6.33%
4.1 years
a. Accept Project Bogata because of the highest IRR that is greater than the WACC.
b. Accept Project Bogata because of the highest IRR and positive NPV.
c. Accept Project Aliga because of the IRR and the shorter Payback period.
d. Accept Project Aliga because of the highest Net Present Value Figures.
e. Accept both A and B as long as their NPVs are positive.
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