Question: Suppose your boss has asked you to analyze two mutually exclusive projects-project A and project B. Both projects require the same investment amount, and the

 Suppose your boss has asked you to analyze two mutually exclusive

Suppose your boss has asked you to analyze two mutually exclusive projects-project A and project B. Both projects require the same investment amount, and the sum of cash wlows of Project is larger than the sum of cash inflows of project B. A coworker told you that you don't need to do an NPV analysis of the projects because you already know that project will have a larger NPV than project B. Do you agree with your coworker's statement? O No, the calculation is based on percentage retums, so the size of a project's cash flows does not affect a project's NP O Yes, project Awilways have the largest NPV, because its cash inflows are greater than projects cash inflows. O No, the NPV calculation we take into account not only the projects cash wlows but alio the timing of cash flows and outlows Consequently, project could have a larger NPV the project A, even though project has larger cash flows

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