Which Mutually Exclusive Project Would You Select, If Both Are

question 76

Multiple Choice

Which mutually exclusive project would you select, if both are priced at $1,000 and your discount rate is 15 percent; Project A with three annual cash flows of $1,000, or Project B, with three years of zero cash flow followed by three years of $1,500 annually?

• A)Project A
• B)Project B
• C)You are indifferent since the NPVs are equal
• D)Neither project should be selected