Question: TT Inc. is considering two projects. Assuming that Projects A and B are mutually exclusive , which recommendation may be the most reasonable for a

TT Inc. is considering two projects. Assuming that Projects A and B 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

A

$4.5 million

4.66%

3.6 years

B

$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 both A and B as long as their NPVs are positive.

d.

Accept Project Aliga because of the IRR and the shorter Payback period.

e.

Accept Project Aliga because of the highest Net Present Value Figures.

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