Question
Consider the following two projects: Project Year 0 Cash Flow Year 1 Cash Flow Year 2 Cash Flow Year 3 Cash Flow Year 4 Cash
Consider the following two projects:
| Project | Year 0 Cash Flow | Year 1 Cash Flow | Year 2 Cash Flow | Year 3 Cash Flow | Year 4 Cash Flow | Discount Rate |
| A | -100 | 40 | 50 | 60 | N/A | .15 |
| B | -73 | 30 | 30 | 30 | 30 | .15 |
Assume that projects A and B are mutually exclusive. The correct investment decision and the best rational for that decision is to:
Group of answer choices
a.invest in project A since NPVB < NPVA.
b.invest in project B since IRRB > IRRA.
c.invest in project B since NPVB > NPVA.
d. invest in project A since NPVA > 0
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Accounting What the Numbers Mean
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
9th Edition
978-0-07-76261, 0-07-762611-7, 9780078025297, 978-0073527062
