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We have two projects, A and B, and their cash flows are indicated in the table below. Note that a negative number is cash outflow,
We have two projects, A and B, and their cash flows are indicated in the table below. Note that a negative number is cash outflow, and a positive number is cash inflow. Suppose that the cost of capital is 20%. Also suppose that you follow the NPV rule to decide whether you will take a project.
Project | Time | |||
| 0 | 1 | 2 | 3 |
A | -600 | 500 | 50 | 400 |
B | -900 | 300 | 500 | 300 |
Which statement is the most correct one?
A. | Accept neither project. | |
B. | Only accept project B. | |
C. | Accept both projects A and B. | |
D. | Only accept project A. |
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