Use the table for the question(s)below. Consider the following two projects: -Assume that projects A and B are mutually exclusive.The correct investment decision and the best rationale for that decision is to A)invest in project A,since NPV_B IRR_A. C)invest in project B,since NPV_B NPV_A. D)invest in project A,since NPV_A 0.

Question

Use the table for the question(s)below. Consider the following two projects: -Assume that projects A and B are mutually exclusive.The correct investment decision and the best rationale for that decision is to A)invest in project A,since NPV_B < NPV_A. B)invest in project B,since IRR_B > IRR_A. C)invest in project B,since NPV_B > NPV_A. D)invest in project A,since NPV_A > 0.

Quizplus · Accepted Answer

The best investment decision is to invest in project B since it has a higher net present value (NPV) than project A. NPV is a measure of the difference between the present value of cash inflows and the present value of cash outflows over a period of time, taking into account the time value of money. In this case, the NPV for project B is $3,000, which is greater than the NPV for project A, which is -$1,000. Therefore, investing in project B would generate more value for the company than investing in project A.

Use the Table for the Question(s)below