Reference no: EM13907214
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 10 percent. Project A s Cash flow from year 0 to year 3: -1000, 400, 400, 700. Project B s Cash flow from year 0 to year 3: -500, 200, 300, 300. Which statement is correct?
Accept A, reject B, because B has lower IRR
Reject A, accept B, because B has higher IRR
Accept A, reject B, because A has higher NPV
Reject A, accept B, because B has higher NPV
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