Question: Two mutually exclusive projects being considered by a firm and have the following projected cash flows: Project A Project B Year Cash Flow Cash Flow

Two mutually exclusive projects being considered by a firm and have the following projected cash flows:

Project A Project B

Year Cash Flow Cash Flow

0 ($150,000) ($150,000)

1 50,000 30,000

2 50,000 30,000

3 50,000 30,000

4 30,000

5 30,000

6 30,000

The cost of capital is 10 percent. Using the NPV rule, evaluate both projects using the replacement approach

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