Question: You are considering the following two mutually exclusive projects. Should you accept or reject these projects based on net present value (NPV) analysis? Why or
You are considering the following two mutually exclusive projects. Should you accept or reject these projects based on net present value (NPV) analysis? Why or why not? Assume the discount rate for both projects is 7 percent.
| Year | Project A | Project B |
| 0 | -$320,000 | -$525,000 |
| 1 | $292,000 | $396,000 |
| 2 | $165,000 | $319,000 |
| 3 | $107,000 | $204,000 |
Group of answer choices
You cannot make this decision based on net present value analysis.
Project B; because the NPV of the project B is greater than the NPV of the project A.
Project A; because the NPV of the project A is greater than the NPV of the project B.
None; because both have the negative NPV.
Both; because Both projects have the positive NPV.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
Study Help