Sentry Oil Inc. is considering two mutually exclusive projects as follows: Sentry's a cost of capital is 14%. It can spend no more than $350,000 on capital projects this year, which of the following statements is applicable when evaluating the projects by the NPV method?
A) Both projects add shareholder wealth and should be undertaken.
B) Project B appears to add more shareholder wealth than project A and should be done.
C) Project A appears to add more shareholder wealth than project B and should be done.
D) Project B should be undertaken because it requires a smaller investment.
Correct Answer:
Verified
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