Use the Table for the Question(s) Below -Assume That Projects a and B Are Mutually Exclusive

question 1

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects:
$\begin{array} { l c c c c c c } \hline \text { Project } & \begin{array} { c } \text { Year 0 } \\\text { Cash Flow }\end{array} & \begin{array} { c } \text { Year 1 } \\\text { Cash Flow }\end{array} & \begin{array} { c } \text { Year 2 } \\\text { Cash Flow }\end{array} & \begin{array} { c } \text { Year 3 } \\\text { Cash Flow }\end{array} & \begin{array} { c } \text { Year 4 } \\\text { Cash Flow }\end{array} & \begin{array} { c } \text { Discount } \\\text { Rate }\end{array} \\\hline \text { A } & - 100 & 40 & 50 & 60 & \text { N/A } & 0.15 \\\hline \mathrm { B } & - 73 & 30 & 30 & 30 & 30 & 0.15 \\\hline\end{array}$
-Assume that projects A and B are mutually exclusive. The correct investment decision and the best rationale for that decision is to

• A) invest in project A, since NPVA > 0.
• B) invest in project B, since IRRB > IRRA.
• C) invest in project B, since NPVB > NPVA > 0.
• D) invest in project A, since NPVB < NPVA.

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