Company is considering two mutually exclusive projects

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Cummings Products Company's cost of capital is 11.2% and the company is considering two mutually exclusive projects. In the past, it usually takes about 5 years for the company to recoup its investments from a good project. The projects' expected cash flows are as follows: Year Project A Project B 0 ($300) ($405) 1 (387) 134 2 (193) 134 3 100 234 4 600 134 5 600 134 6 650 134 7 50 0 Project A's payback period is Project B's payback period is Project A's NPV is Project B's NPV is Project A's IRR is Project B's IRR is Based on IRR, which project(s) should we choose? (Simply type A or B.) Based on payback period, which project(s) should we choose? (Simply type A or B.) Based on NPV, which project(s) should we choose? (Simply type A or B.) If you are the decision maker in this company, which project(s) would you choose? (Simply type A or B.)

Reference no: EM132014465

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