Two mutually exclusive projects have an initial cost of $47,500 each. Project A produces cash inflows of $43,600, $19,800 and $10,400 for Years 1 through 3, respectively. Project B produces cash inflows of $25,300, $37,100, and $22,000 for Years 1 through 3, respectively. The required rate of return is 14.7 percent for Project A and 14.9 percent for Project B. Which project(s) should be accepted and why?

• A.

  Project B, because it has the largest cash inflow in Year 1.

• B.

  Project B, because it has the higher required rate of return.

• C.

  Project B, because it has the larger NPV

• D.

  Project A, because it has the larger NPV.

• E.

  Project A, because it has the higher required rate of return.