You are considering the following two mutually exclusive projects. The required rate of return is 14.6 percent for project A and 13.8 percent for project B. Which project should you accept and why?
Year Project A Project B
0 -$50,000 -$45,000
1 24,800 41,000
2 36,200 20,000
3 21,000 12,000
1. project A; because it has the higher required rate of return
2. project B; because it has the lower required return
3. project A; because it has the largest total cash inflow
4. project B; because it has the largest cash inflow in year one
5. project B; because its NPV is more than the NPV of project A
You are considering the following two mutually exclusive projects. The required rate of return is 14.6 percent for project A and 13.8 percent for project B. Which project should you accept and why?
Year Project A Project B
0 -$50,000 -$45,000
1 24,800 41,000
2 36,200 20,000
3 21,000 12,000
| 1. | project A; because it has the higher required rate of return | |
| 2. | project B; because it has the lower required return | |
| 3. | project A; because it has the largest total cash inflow | |
| 4. | project B; because it has the largest cash inflow in year one | |
| 5. | project B; because its NPV is more than the NPV of project A |
Related questions
A and B are mutually exclusive projects. The required rate of return is 10%.
The cutoff period is 2 years.
| Year | Project A | Project B |
| 0 | -$1,000 | -$1,000 |
| 1 | 500 | 100 |
| 2 | 400 | 300 |
| 3 | 300 | 400 |
| 4 | 100 | 675 |
If the company applies payback period decision, which project should be recommended?
a Project A because it has payback of 2.33 years.
b. Project A because it has payback of 2.107 years.
c. Project B because it has payback of 2.33 years.
d. Project B because it has payback of 3.30 years.
e. Neither of two projects is recommended.
