Question
Project A has an initial cost of $628,000 and Project B has an initial cost of $894,000. Both projects have a positive NPV. Which one
Project A has an initial cost of $628,000 and Project B has an initial cost of $894,000. Both projects have a positive NPV. Which one of these would be your best next step to determine which project to accept assuming the projects are mutually exclusive? Select one:
a. Compute the PI of both projects and select the project with the lower PI value
b. Compute the discounted payback for both projects and select the project with the shortest payback period
c. Compute the AAR for both projects and accept the project with the higher AAR value
d. Compute the IRR on the differences obtained by subtracting Project A's cash flows from those of Project B
e. Compute the IRR for each project and select the project with the higher IRR value
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