Share
Explore BrainMass

NPV

You are considering 2 independent projects with the following cash flows. The required return for both projects is 16 percent. Given this information which one of the following statements is correct?

year Project A Project B
0 -$125,000 -$135,000
1 46,000 50,000
2 79,000 30,000
3 51,000 110,000

a. You should accept Project A and reject B based on their respective NPV's

b. You should accept project B and reject Project A based on their respective NPV's

c. You should accept project A and reject Project B based on their respective IRR's

d. You should accept Project B and reject PRoject A based on their respective IRR's

e. You should accept both projects based on both the NPV and IRR decision rules.

Solution Summary

The solution answers the multiple choice question with a fair amount of detail. Overall, a good response to the question being asked.

$2.19