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

question 39

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects:
$\begin{array} { l c c c c c c c c c } \hline \text { Project } & \begin{array} { c } \text { Year 0 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 1 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 2 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 3 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 4 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 5 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 6 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Year 7 } \\\text { C/F }\end{array} & \begin{array} { c } \text { Discount } \\\text { Rate }\end{array} \\\hline \text { Alpha } & - 79 & 20 & 25 & 30 & 35 & 40 & \text { N/A } & \text { N/A } & 15 \% \\\hline \text { Beta } & - 80 & 25 & 25 & 25 & 25 & 25 & 25 & 25 & 16 \% \\\hline\end{array}$
-Assume that projects Alpha and Beta are mutually exclusive. The correct investment decision and the best rationale for that decision is to

• A) invest in project Alpha, since NPVBeta < NPVAlpha.
• B) invest in project Beta, since IRRB > IRRA.
• C) invest in project Beta, since NPVBeta > NPVAlpha > 0.
• D) invest in project Beta, since NPVBeta > 0.

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