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Homework answers / question archive / Piercy, LLC, has identified the following two mutually exclusive projects
Piercy, LLC, has identified the following two mutually exclusive projects. B 12% project A IRR 109 10 NPV million 5 million Which project will you choose based on the appropriate decision rule? DB O Bath A and B A
In case of mutually exclusive projects, we always choose only one project out of multiple projects. The project that needs to be selected shall be the one which has a positive as well as the highest NPV.
In the present case, out of projects A and B, Project A shall be selected since it has a NPV which is positive as well the NPV of Project A is greater than the NPV of Project B.
Hence the correct answer is option of Project A.
