Two independent projects with the cash flows

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Reference no: EM13947011

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 statements 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 can not 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 can not 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: EM13947011

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