Financial Management

Chapters 9 and 10

Project A has an Initial cost of $80,000 and provides cash inflows of $34,000 a year for three years. Project B has an Initial cost of $80,000 and produces a cash inflow of $114,000 In year 3. The projects are mutually exclusive. Which projects) should you accept If the discount rate is 11.7 percent? What if the discount rate Is 13.5 percent? Accept A as it always has the higher NPV. Accept B as it always has the higher NPV. Accept B at .11.7 percent and A at 13.5 percent. Accept A at 11.7 percent and B at 13.5 percent. Accept A at 11.7 percent and neither at 13.5 percent