Capital budgeting criteria-mutually exclusive projects

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CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4 5 Project 1 -$350 $50 $50 $50 $210 $210 Project 2 -$650 $250 $250 $65 $65 $65

Which project would you recommend? Select the correct answer.

a. Both Projects 1 and 2, since both projects have IRR's > 0.

b. Neither Project 1 nor 2, since each project's NPV < 0.

c. Project 2, since the NPV2 > NPV1.

d. Both Projects 1 and 2, since both projects have NPV's > 0.

e. Project 1, since the NPV1 > NPV2.

Reference no: EM131923983

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