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Your firm is considering one of two projects for investment. Project A costs $12,000 and will bring cash flows of $2,960 for 6 years. Project
Your firm is considering one of two projects for investment. Project A costs $12,000 and will bring cash flows of $2,960 for 6 years. Project B costs $10,000 and will yield cash flows of $2,800 for 5 years. Given that these two projects do not have the same productive lives and your firm's cost of capital is 6 %, which project should you select and why? A) Because its NPV is higher, choose project B B) Because the initial investment is lower, choose project B C) Because its equivalent annual benefit is higher, choose project B D) Because its equivalent annual benefit is higher, choose project A E) Because its NPV is higher, choose project A
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