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Which project will you choose? Use the following information to answer the next THREE questions. A company is analyzing two mutually exclusive projects, S and

Which project will you choose? Use the following information to answer the next THREE questions. A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below:

Year 0

Year 1

Year 2

Year 3

Year 4

Cashflow for S

-100

40

50

30

30

Cashflow for L

-150

10

10

50

200

Assume the company can get an unlimited amount of capital at that cost.

WACC

NPV (S)

NPV (L)

5%

10%

15%

17%

20%

If the companys cost of capital is 15%, what is the net present value of each Project? Based on NPV, which project will you choose?

PLEASE SHOW WORK AND EXPLAIN, THANKS

Select one:

a. NPVS = $100.81, NPVL = $112.45, L

b. NPVS = $33.35, NPVL = $63.24, L

c. NPVS = $82.26, NPVL = $75.63, L

d. NPVS = $20.72, NPVL = $41.52, S

e. NPVS = $9.47, NPVL = $13.48, L

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