Question: 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

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

40,000

0

2

40,000

0

3

40,000

0

4

40,000

0

5

40,000

240,000

If the appropriate discount rate on these projects is 8 percent, which would be chosen and why?

The NPV of Project A is $_____.

The NPV of Project A is $_____.

Which would be chosen and why?

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