Your company is considering two mutually exclusive projects, A and B, whose costs and cash flows are shown below. The projects are equally risky, and their cost of capital is 11%. Choose the correct recommendation.

Year

0

1

2

3

4

Cash Flow A

-3.000

960

1,080

1,200

1,440

Cash Flow B

-2,500

800

900

1,000

1,200

a. Since the NPV and the IRR of project A are both higher than the NPV and the IRR of project B, project A is recommended.

b. The two projects have about the same IRR, but since the NPV of project A is materially higher than the NPV of project B, project A is recommended.

C. The two projects have about the same IRR, but since the NPV of project B is materially higher than the NPV of project A, project B is recommended

d. Since the NPV and the IRR of project B are both higher than the NPV and the IRR of project A, project B is recommended.