Tropical Candy Inc. is considering two mutually exclusive projects, A and B. Their cash flows are shown below. Both Project A and Project B have an estimated cost of capital of 10%.  Cash flows will be realized at the end of each time period. 

Year, t	Project A Cash Flow at time t	Project B Cash Flow at time t
0	-1800	-600
1	110	660
2	263.78	72.6
3	133.1	53.24
4	1024.87	146.41
5	3221.02	1610.51

• Calculate the NPV for each project. Which, if either, the project should be accepted?  Why?
• Are there other capital budgeting criteria?  If yes, list at least one.

Answer rating: 100% (QA)

Net present value of two mutually exclusive project Project A Net present value NPV Cn 1in initial i... View the full answer