Two Projects Being Considered Are Mutually Exclusive and Have the Following

question 74

Multiple Choice

Two projects being considered are mutually exclusive and have the following projected cash flows: $$\begin{array} { | c | c | c | } \hline \text { Year } & \text { Project A } & \text { Project B } \\\hline 0 & - \$ 50,000 & - \$ 50,000 \\\hline 1 & \$ 15,625 & 0 \\\hline 2 & \$ 15,625 & 0 \\\hline 3 & \$ 15,625 & 0 \\\hline 4 & \$ 15,625 & 0 \\\hline 5 & \$ 15,625 & \$ 99,500 \\\hline\end{array}$$ If the required rate of return on these projects is 10%, which would be chosen and why?

• A)B, because of higher NPV.
• B)B, because of higher IRR.
• C)A, because of higher NPV.
• D)A, because of higher IRR.
• E)Neither, because both have IRRs less than the cost of capital.

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Definitions:

Antecubital Region

The area of the arm located at the front of the elbow where veins are commonly accessed for blood drawing.

Elbow

The joint connecting the forearm to the upper arm, allowing for bending and extending motions of the arm.

Gluteal Region

A region of the body located at the posterior aspect of the pelvic girdle, comprising the muscles and tissues around the buttocks.

Buttock

The buttock refers to the posterior round portion of the human pelvis, comprised of muscular and adipose tissue, which supports the body when sitting.