Reference no: EM133060933
Question - Two mutually exclusive projects have an initial cost of $50,000 each. Project A produces cash inflows of $44,700, $20,900 and $11,500 for Years 1 through 3, respectively. Project B produces cash inflows of $26,400, $38,200, and $23,100 for Years 1 through 3, respectively. The required rate of return is 14.9 percent for Project A and 14.7 percent for Project B. Which project(s) should be accepted and why?
A) Project A, because it has the higher required rate of return.
B) Project A, because it has the larger NPV.
C) Project B, because it has the largest cash inflow in Year 1.
D) Project B, because it has the higher required rate of return.
E) Project B, because it has the larger NPV.
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