Two projects being considered by a firm and have the following projected cash flows:

Project A Project B

Year Cash Flow Cash Flow

0 ($120,000) ($120,000)

1 45,000 35,000

2 45,000 45,000

3 65,000 55,000

The cost of capital is 10 percent. Using the NPV rule, evaluate both projects if they are mutually exclusive.

		Accept Project A
		Accept Project B
		Accept both
		Accept neither

1. Two mutually exclusive projects being considered by a firm and have the following projected cash flows:

   Project A Project B

   Year Cash Flow Cash Flow

   0 ($150,000) ($150,000)

   1 50,000 30,000

   2 50,000 30,000

   3 50,000 30,000

   4 30,000

   5 30,000

   6 30,000

   The cost of capital is 10 percent. Using the NPV rule, evaluate both projects using the replacement approach

   		Accept Project A
   		Accept Project B
   		Accept both
   		Accept neither

1. Two mutually exclusive projects being considered by a firm and have the following projected cash flows:

   Project A Project B

   Year Cash Flow Cash Flow

   0 ($120,000) ($120,000)

   1 55,000 30,000

   2 55,000 30,000

   3 55,000 30,000

   4 30,000

   5 30,000

   6 30,000

   The cost of capital is 10 percent. Using the NPV rule, evaluate both projects using the equivalent annual annuity approach

   		Accept Project A
   		Accept Project B
   		Accept both
   		Accept neither