Consider the following two mutually exclusive projects:

Whichever project you choose, if any, you require a 10% return on your investment.

1. If you apply the payback criterion, which investment will you choose?
2. If you apply the NPV criterion, which investment will you choose?
3. If you apply the IRR criterion, which investment will you choose? (Better help with Excel)
4. Based on your answers (a) through (c), which project will you finally choose?

Year Cash Flow (A) $170,000 30,000 20,000 15,000 380,000 Cash Flow (B) $18,000 15,000 10,000 3,000 3,000