Problem 11-10 Capital budgeting criteria: mutually exclusive projects A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4 5 Project 1 -$200 $65 $65 $65 $210 $210 Project 2 -$600 $250 $250 $50 $50 $50 Which project would you recommend? Select the correct answer.

o I. Project 1, since the NPV1 > NPV2.

o II. Both Projects 1 and 2, since both projects have IRR's > 0.

o III. Project 2, since the NPV2 > NPV1.

o IV. Both Projects 1 and 2, since both projects have NPV's > 0.

o V. Neither A or B, since each project's NPV < 0.