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Your firm has estimated the following cash flows for two mutually exclusive capital investment projects. The firm's required rate of return is 12%. Year Project
Your firm has estimated the following cash flows for two mutually exclusive capital investment projects. The firm's required rate of return is 12%. Year Project A Cash Flow Project B Cash Flow 0 $168,000 -$168,000 1 84,000 10,000 2 78,400 22,000 3 78,400 22,000 4. 14,000 98,000 5 14,000 120,000 6 11,200 120,000 Which of the following statements best describes projects A and B? Due to size disparity, IRR indicates that A is best and NPV indicates that B is best. Due to time disparity, IRR indicates that B is best and NPV indicates that A is best. Due to time disparity, IRR indicates that A is best and NPV indicates that B is best. Both NPV and IRR lead to the same investment decision. Due to size disparity, IRR indicates that B is best and NPV indicates that A is best
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