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Project A and Project B are mutually exclusive and have the following expected cash flows: A t=0 t=1 t=2 t=3 t=4 -$120,000 $30,000 $20,000 $40,000
Project A and Project B are mutually exclusive and have the following expected cash flows: A t=0 t=1 t=2 t=3 t=4 -$120,000 $30,000 $20,000 $40,000 $70,000 B -$150,000 $40,000 $20,000 $50,000 $85,000 Which of the following statement is correct? a. Always select Project A because the IRR of Project A is higher than the IRR for Project B O b. Always select Project B because the IRR of Project B is higher than the IRR for Project A O c. Select Project B, if Cost of Capital for the firm undergoing the project is 5% O d. Cannot tell from the provided information e. Select Project A, if Cost of Capital for the firm undergoing the project is 5%
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