Question
You are trying to determine which of two mutually exclusive projects to undertake. Project Adam has an initial outlay of $10,000, an NPV of $4,392.15,
You are trying to determine which of two mutually exclusive projects to undertake. Project Adam has an initial outlay of $10,000, an NPV of $4,392.15, an IRR of 11.33%, and an EAA of $1,158.64. Project Eve has an initial outlay of $15,000, an NPV of $5,833.73, an IRR of 9.88%, and an EAA of $1,093.50. The cost of capital for both projects is 9%, and the projects have different lives. If the projects are not repeatable, then:
A) You should do both projects because they have positive NPVs.
B)You should do Project Adam because it has a higher EAA.
C)You should do Project Eve because it has a higher NPV.
D)You should do Project Adam because it has a higher IRR.
E)You should do no projects because neither add value to you.
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