Question
12. Project A has an initial cost of $80,000 and provides cash inflows of $34,000 a year for three years. Project B has an initial
12. Project A has an initial cost of $80,000 and provides cash inflows of $34,000 a year for three years. Project B has an initial cost of $80,000 and produces a cash inflow of $114,000 in year three. The projects are mitially exclusive.Which project(s) should you accept if the discount rate is 11.7 percent? What if the discount rate is 13.5 percent? A. Accept A as it always has the higher NPV. B. Accept B since it has the greatest total cash flow. C. Accept A at 11.7 percent and B at 13.5 percent. D. Accept B at 11.7 percent and A at 13.5 percent. E. Accept A at 11.7 percent and neither at 13.5 percent.
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