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2. Two projects being considered are mutually exclusive and have the following projected cash flows:. If the required rate of return on these projects is
| 2. Two projects being considered are mutually exclusive and have the following projected cash flows:. If the |
| required rate of return on these projects is 11 percent, which would be chosen and why? |
| Project A | Project B | |
| Year | Cash Flow | Cash Flow |
| 0 | -40,000 | -40,000 |
| 1 | 15,625 | 0 |
| 2 | 15,625 | 0 |
| 3 | 15,625 | 0 |
| 4 | 15,625 | 0 |
| 5 | 15,625 | 99,500 |
| 3. Two projects being considered are mutually exclusive and have the following projected cash flows:. If the |
| required rate of return on these projects is 6 percent, what is each projects NPV? |
| Project A | Project B | |
| Year | Cash Flow | Cash Flow |
| 0 | -80,000 | -80,000 |
| 1 | 20,000 | 0 |
| 2 | 20,000 | 0 |
| 3 | 20,000 | 0 |
| 4 | 20,000 | 0 |
| 5 | 20,000 | 100,000 |
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