Question
You are considering the following two mutually exclusive projects. The required rate of return is 14.6 per cent for project A and 13.8 per cent
You are considering the following two mutually exclusive projects. The required rate of return is 14.6 per cent for project A and 13.8 per cent for project B. Which project should you accept and why?
Year. Project A. Project B
0. -50000. -50000
1. 24800. 41000
2. 36200. 20000
3. 21000. 10000
Multiple Choice
1. project B; because it has the largest total cash inflow
2. project A; because it has the higher required rate of return
3. project B; because it has the largest cash inflow in year one
4. project A; because its NPV is about 4,900 more than the NPV of project B
5. project B; because it has the lower required return
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