Question: You are asked to evaluate two mutually exclusive projects. Incremental cash ows of the two projects are given in the following table. Suppose the discount

You are asked to evaluate two mutually exclusive projects. Incremental cash ows of the two projects are given in the following table. Suppose the discount rate is 12%. Which project will you choose? What if the discount rate is 18% instead?

year 0 1 2 A -100 90 40 B -120 100 55 A. Always choose A. B. Always choose B. C. Indierent between A and B. D. Choose A when the discount rate is 12%, and B when the discount rate is 18%. E. Choose B when the discount rate is 12%, and A when the discount rate is 18%

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