A firm with a WACC of 10% is considering the following mutually exclusive projects: 1 2 3 4 5 + + + + H Project 1 -$450 $65 $65 $65 $180 $180 Project 2 -$450 $300 $300 $145 $145 $145 Which project would you recommend? Select the correct answer. Oa. Project 2, since the NPV2 > NPV1. Ob. Neither Project 1 nor 2, since each project's NPV < 0. Oc. Project 1, since the NPV1 > NPV2. Od. Both Projects 1 and 2, since both projects have NPV's > 0. Oe. Both Projects 1 and 2, since both projects have IRR's > 0.

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter10: Project Cash Flows And Risk
Section: Chapter Questions
Problem 20PROB
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A firm with a WACC of 10% is considering the following mutually exclusive projects:
1
2
3
4
5
+
+
+
+
H
Project 1
-$450
$65
$65
$65
$180
$180
Project 2
-$450
$300
$300 $145 $145
$145
Which project would you recommend?
Select the correct answer.
Oa. Project 2, since the NPV2 > NPV1.
Ob. Neither Project 1 nor 2, since each project's NPV < 0.
Oc. Project 1, since the NPV1 > NPV2.
Od. Both Projects 1 and 2, since both projects have NPV's > 0.
Oe. Both Projects 1 and 2, since both projects have IRR's > 0.
Transcribed Image Text:A firm with a WACC of 10% is considering the following mutually exclusive projects: 1 2 3 4 5 + + + + H Project 1 -$450 $65 $65 $65 $180 $180 Project 2 -$450 $300 $300 $145 $145 $145 Which project would you recommend? Select the correct answer. Oa. Project 2, since the NPV2 > NPV1. Ob. Neither Project 1 nor 2, since each project's NPV < 0. Oc. Project 1, since the NPV1 > NPV2. Od. Both Projects 1 and 2, since both projects have NPV's > 0. Oe. Both Projects 1 and 2, since both projects have IRR's > 0.
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