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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 -$250 $50 $50 $50 $175 $175 Project 2 -$550 $350 $350 $105 $105 $105 Which project would you recommend? Select the correct answer

Finance Oct 20, 2021

A firm with a WACC of 10% is considering the following mutually exclusive projects:

Project 1	-$250	$50	$50	$50	$175	$175
Project 2	-$550	$350	$350	$105	$105	$105

Which project would you recommend?

Select the correct answer.

a. Project 2, since the NPV₂ > NPV₁.

b. Neither Project 1 nor 2, since each project's NPV < 0.

c. Both Projects 1 and 2, since both projects have IRR's > 0.

d. Project 1, since the NPV₁ > NPV₂.

e. Both Projects 1 and 2, since both projects have NPV's > 0.

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