Question

20) You are considering the following two mutually exclusive projects. The required return on each project is 12 percent. Which project should you accept and what is the best reason for that decision?

Cash Flow Cash Flow Year A B

       

0 1 2 3

-$32,000.00 $11,500.00 $15,900.00 $13,200.00

-$26,000.00 $23,500.00 $5,800.00 $4,900.00

           

A) Project A, because it has the higher net present value
B) Project A, because it pays back faster
C) Project B, because it has the higher internal rate of return D) Project B, because it has the higher net present value
E) Project A, because it has the higher internal rate of return

Answer 1