Question
Isaac has analyzed two independent projects of similar size and has compiled the following information based on his analysis. Both projects have 3- year lives.
Isaac has analyzed two independent projects of similar size and has compiled the following information based on his analysis. Both projects have 3- year lives. The management requires to have their initial investment back in 4 years. Project A Project B NPV 3,400 2,900 IRR 15% 18% Required return 12% 12% Payback period 3 years 2 years Isaac has been asked for his best recommendation given this information. His recommendation should be to accept: A. both projects. B. project B because it has the shortest payback period. C. project B and reject project A based on their IRR. D. project A and reject project B based on their NPV. E. neither project.
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