Question
Two projects being considered are mutually exclusive and have the following cash flows: Year Project A Project B 0 -$50,000 -$50,000 1 5,000 15,625 2
Two projects being considered are mutually exclusive and have the following cash flows:
Year | Project A | Project B |
0 | -$50,000 | -$50,000 |
1 | 5,000 | 15,625 |
2 | 5,000 | 15,625 |
3 | 0 | 15,625 |
4 | 0 | 15,625 |
5 | 80,500 | 15,625 |
If the required rate of return on these projects is 10 percent, you find that (i) the net present value (NPV) is $8,662 for project A and $9231 for project B respectively, (ii) the internal rate of return (IRR) is 14.75 for project A and 16.99 for project B respectively. Based on your analysis, which project would you recommend? Why? Group of answer choices:
Based on the NPV evaluation, we prefer to take project A. Based on the IRR evaluation, we also prefer to take project B. Based on the NPV evaluation, we prefer to take project B. Based on the IRR evaluation, we also prefer to take project B. Based on the NPV evaluation, we prefer to take project B. Based on the IRR evaluation, we also prefer to take project A. Based on the NPV evaluation, we prefer to take project A. Based on the IRR evaluation, we also prefer to take project A. None of above.
please answer, thank u!
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