Question
Consider the following two mutually exclusive project. year 0, project A -$45,000 Project B $40,000, Year 1, Project A , $,10,000 Project B , $10,000
Consider the following two mutually exclusive project. year 0, project A -$45,000 Project B $40,000, Year 1, Project A , $,10,000 Project B , $10,000 , Year 2 Project A, 10,000, Project B, $10,000 Year 3 Project A, $10,000 , Project B, $10,000, Year 3 Project A $10,000 Project B, $ 10,000, year 4, Project A, 10,000 Project B, $10,000, Year 5 Project A, $15,000 Project B, $10,000, Year 6, Project A, $15,000, Project B, $10,000, Year 7 Project A, $25,000 Project B, $20,000, Year 8 Project A, $25,000, Project B, $20,000, Year 9 Project A, $25,000, Project B, $20,000. You require a 14% return on your investment. A) If you apply the payback criteria, which investment will you choose, and why B) If you apply the NPV criterion which investment will you choose and why C) If you apply the IRR Criterion which investment will you choose and why D) Based on your answer in A, B & C which project will you finally choose and why.
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