2D2B TWO MUTUALLY EXCLUSIVE CAPITAL EXPENDITURE PROJECTS HAVE THE FOL...
336.
CSO: 2D2b
LOS: 2D2b
Two mutually exclusive capital expenditure projects have the following characteristics.
Project A
Project B
Investment
$100,000
$150,000
Net cash inflow - Year 1
40,000
80,000
Year 2
50,000
70,000
Year 3
60,000
60,000
All cash flows are received at the end of the year. Based on this information, which one
of the following statements is not correct?
a.
The net present value of Project A at a cost of capital of 10% is $22,720.
b.
The net present value of Project B at a cost of capital of 12% is $19,950.
c.
The internal rate of return of Project B is greater than the internal rate of return of
Project A.
d.
The payback years for Project A is greater than the payback years for Project B.