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Capital budgeting criteria: mutually exclusive projects A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4
Capital budgeting criteria: mutually exclusive projects A firm with a WACC of 10% is considering the following mutually exclusive projects:
0 1 2 3 4 5
Project A -$400 $40 $40 $40 $225 $225
Project B -$450 $200 $200 $60 $60 $60
Which project would you recommend? Select the correct answer. I. Neither A or B, since each project's NPV < 0. II. Project A, since the NPVA > NPVB. III. Both Projects A and B, since both projects have IRR's > 0. IV. Project B, since the NPVB > NPVA. V. Both Projects A and B, since both projects have NPV's > 0.
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