A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 5 Project 1 -$300 $65 $65 $65 $210 $210 Project 2 -$400 $300 $300 $150 $150 $150 Which project would you recommend? Select the correct answer. a. Both Projects 1 and 2, since both projects have NPV's > 0. O b. Project 1, since the NPV1 > NPV2. c. Both Projects 1 and 2, since both projects have IRR's > 0. O d. Project 2, since the NPV2 > NPV1. e. Neither Project 1 nor 2, since each project's NPV < 0.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A firm with a WACC of 10% is considering the following mutually exclusive projects:
0
1
2
3
4
5
Project 1
-$300
$65
$65
$65
$210
$210
Project 2
-$400
$300
$300
$150
$150
$150
Which project would you recommend?
Select the correct answer.
a. Both Projects 1 and 2, since both projects have NPV's > 0.
b. Project 1, since the NPV1 > NPV2.
O c. Both Projects 1 and 2, since both projects have IRR's > 0.
d. Project 2, since the NPV2 > NPV1.
e. Neither Project 1 nor 2, since each project's NPV < 0.
Transcribed Image Text:A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4 5 Project 1 -$300 $65 $65 $65 $210 $210 Project 2 -$400 $300 $300 $150 $150 $150 Which project would you recommend? Select the correct answer. a. Both Projects 1 and 2, since both projects have NPV's > 0. b. Project 1, since the NPV1 > NPV2. O c. Both Projects 1 and 2, since both projects have IRR's > 0. d. Project 2, since the NPV2 > NPV1. e. Neither Project 1 nor 2, since each project's NPV < 0.
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