Randy's Manufacturing is considering two mutually exclusive projects. The company has a required rate of return of 13.5% on projects of this nature. Project A costs $100,000 and has an IRR of 14.5%. Project B costs $150,000 and has an IRR of 14%. Which project should be accepted and why?

Multiple Choice

• Project B because it has the lower IRR of the two projects.

• Project B because it has the largest net present value.

• Project A because it costs less and has a higher IRR than Project B.

• Both projects because both project IRRs are greater than the required return.

• Project A because it has the highest IRR of the two projects and exceeds the required return.