What has caused the ranking conflict


Problem: Considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows:

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

The required rate of return on these projects is 11 percent.

1. What has caused the ranking conflict?

2. Which project should be accepted? Why?

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Finance Basics: What has caused the ranking conflict
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