?1. (Mutually exclusive projects and NPV?) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash? flows:
YEAR PROJECT A CASH FLOW PROJECT B CASH FLOW
0 -90,000 -90,000
1 37,000 0
2 37,000 0
3 37,000 0
4 37,000 0
5 37,000 210,000
If the appropriate discount rate on these projects is 11 percent, which would be chosen and? why?
What is the NPV of project? A? $? (Round to the nearest? cent.) ANSWER:
What is the NPV of project? B? $(Round to the nearest? cent.) ANSWER:
Which project would be chosen and? why? ?
A. Cannot choose without comparing their IRRs.
B. Choose Upper A because its NPV is higher.
C. Choose both because they both have positive NPVs.
D. Choose Upper B because its NPV is higher.