Butler Co. is considering twomutually exclusiveprojects (Project A and Project B) with the following projected cash flows:

Year 0 1 2 3 4

Project A cash flows -$10,000 $2,500 $3,500 $4,500 $5,000

Project B cash flows $50,000 $10,000 $16,000 $19,000 $21,000

The WACC for both projects is 8%. Butler performed an analysis of these projects using both the NPV method and the IRR method, with the following results:

NPV (Project A) = $2,563IRR (Project A) = 17.77%

NPV (Project B) = $3,495IRR (Project B) = 10.77%

What decision should be made regarding these projects, and why?

Select one:

a. Project A should be accepted, because it has the higher IRR.

b. No decision can be made, because the two methods (NPV and IRR) give conflicting results.

c. Project B should be accepted, because it has the higher NPV.

d. Neither project should be accepted