You are evaluating two potential projects for your company. Project A requires an initial investment of $50,000 and is expected to generate cash flows of $20,000 per year for five years (starting next year). Project B requires an initial investment of $60,000 and is expected to generate cash flows of $18,000 per year for five years (starting next year). The discount rate is 10%.

Calculate the NPV for both Project A and Project B.

For each of the following, type: "A", "B", "A and B", or "Neither".

a) Which project should you choose if they are independent?

Choose Project

b) Which project should you choose if they are mutually exclusive?

Choose Project