Question

Projects A and B are mutually exclusive and have an initial cost of $82,000 each. Project A provides cash inflows of $34,000 a year for three years while Project B produces a cash inflow of $115,000 in Year 3. Which project(s) should be accepted if the discount rate is 11.7 percent? What if the discount rate is 13.5 percent? A) Accept A at both discount rates B) Accept A at 11.7 percent and neither at 13.5 percent C Accept B at both discount rates D) Accept both at 11.7 percent and neither at 13.5 percent E) Accept B at 11.7 percent and neither at 13.5 percent

Answer 1

Answer:

E. Accept B at 11.7 percent and neither at 13.5 percent