Project A and B both have positive NPVs. If A and B are mutually exclusive, others thing held constant, which project will management accept?

Multiple Choice

• Management will accept both A and B since they both have positive NPVs.

• When projects are mutually exclusive, the NPV rule is ignored and neither project is accepted.

• Management will accept the project with the lower NPV.

• Management will accept the project with the higher NPV.