Use the table for the question(s) below.
Consider the following two projects:
$\begin{array} { l c c c c c c }
\hline \text { Project } & \begin{array} { c }
\text { Year 0 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Year 1 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Year 2 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Year 3 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Year 4 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Discount } \
\text { Rate }
\end{array} \
\hline \text { A } & - 100 & 40 & 50 & 60 & \text { N/A } & 0.15 \
\hline \mathrm { B } & - 73 & 30 & 30 & 30 & 30 & 0.15 \
\hline
\end{array}$
-Assume that projects A and B are mutually exclusive. The correct investment decision and the best rationale for that decision is to

Question

Use the table for the question(s) below.
Consider the following two projects:
$\begin{array} { l c c c c c c } 
\hline \text { Project } & \begin{array} { c } 
\text { Year 0 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Year 1 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Year 2 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Year 3 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Year 4 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Discount } \
\text { Rate }
\end{array} \
\hline \text { A } & - 100 & 40 & 50 & 60 & \text { N/A } & 0.15 \
\hline \mathrm { B } & - 73 & 30 & 30 & 30 & 30 & 0.15 \
\hline
\end{array}$
-Assume that projects A and B are mutually exclusive. The correct investment decision and the best rationale for that decision is to

Quizplus · Accepted Answer

The NPV of project B is greater than the NPV of project A, and both NPVs are positive. Therefore, the correct investment decision is to invest in project B.

Use the Table for the Question(s) Below -Assume That Projects a and B Are Mutually Exclusive