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Kevin has analyzed two mutually exclusive projects. He collected the following information. Which project
shoud he choose? Why?(Both projects have 3-year lives and both projects has similar size.)
Project A Project B
NPV 71,406
72,909
Payback period 1.95 2.21
IRR 10.5 percent 11 percent
Required return 8.25 percent 8.25 percent
A. Both projects; because both projects have positive NPV.
B. Project A; because project A has shorter payback period than project B.
C. Project B; because project B has higher NPV than project A.
D. Neither of Projects. ; because information is still not enough to determine.
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sh the exam.
