Question: Year Project A (CF) Project B (CF) 0 1 2 3 -5000 +2000 +3000 +4000 -5000 +2500 +2000 +5000 10. If the projects are independent

Year Project A (CF) Project B (CF) 0 1 2 3

Year Project A (CF) Project B (CF) 0 1 2 3 -5000 +2000 +3000 +4000 -5000 +2500 +2000 +5000 10. If the projects are independent and the cost of capital is 10 percent: (a) Project B is preferable because the NPV is higher. (b) Project A is preferable because the Payback is quicker. (c) Both projects are acceptable since each has NPV>0. (d) Both projects are acceptable if management policy is to accept all projects with a payback period of less than 2 years. (e) Neither A or B would be acceptable choices

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