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    Mutually Exclusive Projects and Cash Flows

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    7. You are considering two mutually exclusive projects with the following cash flows. Will your choice between the two projects differ if the required rate of return is 8% rather than 11% ? If so, what should you do?

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    Yes; Select A at 8% and B at 11%.

    The NPV of A at 8% is higher and so select A.
    At 11%, the NPV of A is negative and B is positive and so select B.

    7. You are ...

    Solution Summary

    The solution explains how to decide between mutually exclusive projects.