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​Two Mutually Exclusive Investments Cost $10,000 Each and Have the Following

Question 71

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​Two mutually exclusive investments cost $10,000 each and have the following cash inflows. The firm's cost of capital is 12%.​  Investment \text { Investment }
 Cash inflow: AB Year 1$12,407234$19,390\begin{array}{cr}\text { Cash inflow: }&A&B\\\text { Year } & \\1 & \$ 12,407&-- \\2 & -- &--\\3 & --&-- \\4 & --&\$19,390\end{array}

a. What is the net present value of each investment?
b. What is the internal rate of return of each investment? ost of capital is 12%.
c. Which investment(s) should the firm make? y> ost of capital is 12%.
d. Would your answers be different to c if the funds received in year 1 for investment A could be reinvested at 12%, 16%, or 20%?

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