You have a choice between these 2 mutually exclusive investments, Projects A and B. If you require a15% return, which investment should you choose?Project AProject BYearCash FlowCash Flow-100,000I.125,000120,00074,00040,00046,000381,00040,000O Project A, because it has a smaller initial investment.Project B, because it has a higher NPV.O Either one, because they have the same profitability indexes.O Project A, because it has the higher NPV.O Project B, because it pays back faster.2.

The decision can be taken on the basis of NPV NPV can be calculated using following function in…

Answered: You have a choice between these 2…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

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You have a choice between these 2 mutually exclusive investments, Projects A and B. If you require a 15% return, which investment should you choose? Project A Project B Year Cash Flow Cash Flow -100,000 I-125,000 1 20,000 74,000 40,000 46,000 81,000 40,000 3.