Considering the mutually exclusive projects

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Reference no: EM131927817

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 -$400 $65 $65 $65 $160 $160

Project 2 -$400 $350 $350 $45 $45 $45

Which project would you recommend?

Select the correct answer.

I. Project 1, since the NPV1 > NPV2.

II. Project 2, since the NPV2 > NPV1.

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

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

V. Neither A or B, since each project's NPV < 0.

Reference no: EM131927817

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