Fast Food Restaurant (FF) has two mutually exclusive investment projects (A & B) to evaluate; both can be repeated indefinitely. Both projects are equally risky and may be repeated indefinitely. The firms WACC is 6%

19. Which of the below choices is the most CORRECT? *

A) NPV of project A is higher than the NPV of project B by $965.3

B) NPV of project B is higher than the NPV of project A by $965.3

C) Project B is more profitable than project A.

D) Choices (B) and (C).

E) None of the above.

20. Which of the two projects adds the most value to the firm? *

A) Project B adds more value to the firm than project A since the EAA of project B is greater than the EAA of project A.

B) Project A adds more value to the firm than project B since the EAA of project A is greater than the EAA of project B.

C) Both projects can be accepted by the company.

D) None of the above.

Time Project A Project B 0 1 90,000 25,000 25,000 40,000 125,000 40,000 35,000 30,000 30,000 12,000 4 5