Mission Co.requires an initial investment of $50,000, and has a net present value of $12,000.Ardent Co.requires an initial investment of $100,000, and has a net present value of $13,000.The projects are mutually exclusive.The firm should accept
A)Mission Co.
B)Ardent Co.
C)both projects.
D)neither project.

Question

Quizplus · Accepted Answer

Ardent Co. has a higher net present value compared to Mission Co. even though it requires a higher initial investment. Since the projects are mutually exclusive, we should choose the project with the higher net present value, which is Ardent Co. Therefore, the best choice is to invest in Ardent Co. and not in Mission Co.