Textiles Unlimited Has Gathered Projected Cash Flows for Two Projects

question 68

Multiple Choice

Textiles Unlimited has gathered projected cash flows for two projects.At what interest rate would the company be indifferent between the two projects? Which project is better if the required return is 12 percent? $$\begin{array} { | r | r | r | } \hline \text { Year } & \underline { \text { Cash Flow } } & \underline { \text { Cash } } \\& \underline { ( A ) } & \text { Flow(B) } \\\hline 0 &-\$105,000&-\$105,000\\\hline 1 & 42,200 & - 52,600 \\\hline 2 & 34,600 & 39,400 \\\hline 3 & 38,700 & 35,500 \\\hline 4 & 40,500 & 30,100 \\\hline\end{array}$$

• A)11.76 percent; A
• B)12.49 percent; A
• C)12.49 percent; B
• D)-4.44 percent; A
• E)-4.44 percent; B

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