Considering two mutually exclusive projects

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Reference no: EM132018198

Good old XYZorp (they're back) is considering two mutually exclusive projects, A & B in order to expand their product line. After letting the cost accountants out of their cages, it was determined that project A's initial investment must be $42,400, while project B will cost $60,000. Project A has projected cash inflows of $25,000 per year for three years. Project B's inflows are more variable: $10,000 in year 1; $30,000 in year 2; and $40,000 in its final year. The firm's cost of capital is 12%. YES - this IS important! Using NPV analysis, if the NPV for project? B = + $ 1,320 (yes, I did the computation for you), which project do you prefer In other words - which project will have the higher NPV.

Reference no: EM132018198

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