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Problem 3 (10 points) The following cash flows are estimated for two mutually exclusive projects: Time Project A Project B 0 -$100.000 -S110,000 1 60.000
Problem 3 (10 points) The following cash flows are estimated for two mutually exclusive projects: Time Project A Project B 0 -$100.000 -S110,000 1 60.000 20,000 2 40.000 40.000 3 20,000 40,000 10,000 50.000 1. Which project would you choose if you rely on the NPV at a cost of capital of 5%? What if you decide to use the IRR as your decision criteria? 2. Which project would you choose if you rely on the NPV at a cost of capital of 10%? What if you decide to use the IRR as your decision criteria? 3. How do you interpret your answers to the above questions? Show your computations for this
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