Which project should be accepted?
Caledonia is considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows:
The required rate of return on these projects is 11 percent.
YEAR PROJECT A PROJECT B
0 -$100,000 -$100,000
1 32,000 0
2 32,000 0
3 32,000 0
4 32,000 0
5 32,000 $200,000
Which project should be accepted? Why? Please answer in paragraph form!