Consider the following two mutually exclusive projects: year cash flow A cash fl
ID: 2670117 • Letter: C
Question
Consider the following two mutually exclusive projects:year cash flow A cash flow B
0 -$54,000 -$23,000
1 12,700 11,600
2 23,200 11,200
3 27,600 12,500
4 46,500 6,000
Whichever project you choose, if any, you require a 14 percent return on your investment. If you apply the payback criterion, you will choose investment _____, if you apply the NPV criterion, you will choose investment _____; if you apply the IRR criterion, you will choose investment ____; if you choose the profitability index criterion, you will choose investment ____. Based on your first four answers, which project will you finally choose?
a. A; B; A; A; B
b. A; A; B; B; A
c. A; A; B; B; B
d. B; A; B; A; A
e. B; A; B; B; A
Explanation / Answer
c. A; A; B; B; B