Mutually exclusive projects with npvs and project lives

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Reference no: EM131563370

ABC has been considering two mutually exclusive projects with the following NPVs and project lives.

Project NPV Economic Life

A 5,000 3 years

B 6,500 5 years

ABC’s cost of capital is 15%. Assuming that projects can be repeated with the same cash flow and risk profiles what would be the respective Net Terminal Values of projects A and B (round to the next integer)? What should be the decision?

A. 14,599 and 12,927, Accept A

B. 2,190 and 1,939, Accept A

C. Accept both A and B

D. 33,333 and 43,333, Accept B

Reference no: EM131563370

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