Questions on Mutually Exclusive Equal-length (MEEL) Projects.

The following questions relate to these two projects, each with r_occ = 10.0%. The table shows cash flows for each project.

Project	EOY 0	EOY 1	EOY 2
Proj. A	-100.00	20.00	120.00
Proj. B	-50.00	10.00	80.00

1.If you have an unlimited budget, which project should you choose

A)Not enough information is provided to answer this question.

B)Neither.

C)Project B)

D)Project A)

E)They are both equally good.

2.What is your reasoning behind your answer to the above question?

A)This project adds the most value (wealth) to my firm.

B)When analysis methods conflict, the projects are assumed to be of equal value

C)My money will grow at the fastest rate with this project.

D)This project has the biggest bang for each dollar of cash invested.

3.Why?

A)This combination gives the highest cumulative IRR

B)This combination gives the highest total BCR

C)This set gives the highest total NPV.

D)This set minimizes costs while providing an overall positive NPV,