Consider two, mutually exclusive projects, Project A with a useful life of 4 years and Project B with a useful life of 5 years. Project A has a net present value of $4,000, whereas Project B has a net present value of $5,000. If the project cost of capital for both projects is 8 percent, what is the most appropriate decision?

Question

Quizplus · Accepted Answer

Given that both projects are mutually exclusive (meaning only one can be chosen) and Project B has a higher net present value (NPV) than Project A, the most appropriate decision is to accept Project B and reject Project A. This is because, in comparing mutually exclusive projects, the one with the higher NPV should be selected, assuming the cost of capital and other factors are constant.

Consider Two, Mutually Exclusive Projects, Project a with a Useful