Yong Importers, an Asian import company, is evaluating two mutually exclusive projects, A and B. The relevant cash flows for each project are given in the table below. The cost of capital for use in evaluating each of these equally risky projects is 10 percent.

initial investment project a project b

$350,000 $425,000

year cash inflows (cf)

1 140,000 175,000

2 165,000 150,000

3 190,000 125,000

4 100,000

5 75,000

6 50,000

Which project should be chosen on the basis of the normal NPV approach? (See Table 11.11)

		A) Project A because its IRR is higher
		B) Project B because its NPV is higher
		c) Project A because its NPV is higher
		D) Project B because its IRR is higher