# XYZ Corporation is considering two mutually exclusive projects that require a $150,000 investment each. Project A has an expected life

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## Question:

XYZ Corporation is considering two mutually exclusive projects that require a $150,000 investment each. Project A has an expected life of 6 years and will generate net cash flows of $35,000 per year. Project B has an expected life of 8 years and will generate net cash flows of $30,000 per year. Both projects have a salvage value of zero. XYZ Corporation's cost of capital is 12%. Using the net present value (NPV) method, which project should the company select?

**Related Book For**

## Fundamentals of Financial Management

ISBN: 978-0324597707

12th edition

Authors: Eugene F. Brigham, Joel F. Houston

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