You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows:

YEAR PROJECT A CASH FLOW PROJECT B CASH FLOW

0 -110,000 -110,000

1 30,000 0

2 30,000 0

3 30,000 0

4 30,000 0

5 30,000 210,000

If the appropriate discount rate on these projects is 9 percent, which would be chosen and why?

What is the NPV of project A?

$nothing

(Round to the nearest cent.)

What is the NPV of project B?

$nothing

(Round to the nearest cent.)

Which project would be chosen and why?(Select the best choice below.)

A.

Choose Upper B because its NPV is higher.Choose B because its NPV is higher.

B.

Choose both because they both have positive NPVs.

C.

Choose Upper A because its NPV is higher.Choose A because its NPV is higher.

D.

Cannot choose without comparing their IRRs.