Using net present value as a criterion

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Two mutually exclusive projects, expected to last indefinitely, are being compared. Program A has annual profits and consumer surplus of $5 million and a one-time capital expenditure of $20 million. Program B has consumer surplus of $9 million and a one-time capital expenditure of $55 million. Using net present value as a criterion, which alternative should be selected?

A) If the discount rate is 12%, Program A should be selected.

B) If the discount rate is less than 10%, Program A should be selected.

C) If the discount rate is 22%, program B should be selected.

D) The programs have the same net present value regardless of the discount rate used.

E) Answers b and c are both correct.

Reference no: EM132346117

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