7

Consider the following cash flows on two independent projects for ABC Corporation. Both projects required an annual return of 10 percent. If ABC Corporation applies the IRR decision rule, which project should it choose? Why or why not?

Year	Project A	Project B
0	-$42,000	-$52,000
1	$15,300	$15,000
2	$18,400	$38,400
3	$18,500	$5,500

Group of answer choices

Both; Both IRR exceed the required return.

Project A; The IRR is less than the required return by about 1.32 percent.

Project B; The IRR exceeds the required return by about 2.95 percent.

None; Both IRR are less the required return.

Project A; The IRR exceeds the required return by about 1.32 percent.