Considering two independent projects with the cash flows

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You are considering two independent projects with the following cash flows. The required return for both projects is 10%. Given this information, which one of the following is correct?

Year Project A Project B

0 -$950,000 -$125,000

1 $330,000    $   55,000

2 $400,000    $   50,000

3 $450,000    $ 50,000

A. You should accept project B since it has the higher IRR and reject project A because you cannot accept both projects.

B. You should accept project A because it has the lower NPV and reject project B

C. You should accept project A because it has the higher NPV and you cannot accept both projects

D. You should accept project B because it has the higher IRR and reject project A.

E. You should accept both projects if the funds are available to do so since both NPV’s are >0.

Reference no: EM132053098

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