Capital budgeting criteria: mutually exclusive projects

Project S costs $20,000 and its expected cash flows would be $6,500 per year for 5 years. Mutually exclusive Project L costs $28,000 and its expected cash flows would be $12,200 per year for 5 years. If both projects have a WACC of 15%, which project would you recommend?

Select the correct answer.

Select the correct answer. 1. Project S, since the NPVS > NPVL. II. Neither Sor L, since each project's NPV NPVS. IV. Both Projects S and L, since both projects have NPV's > 0. V. Both Projects S and L, since both projects have IRR's > 0