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The directors of JELLYCORP Inc. must decide between two possible investments; the cash flows are shown in the following table:

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The directors of JELLYCORP Inc. must decide between two possible investments; the cash flows are shown in the following table:

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If the cost of capital is 9%:

a) Which project has a higher NPV?

b) Which project has a higher IRR?

c) Which project should be taken by the company if we’re dealing with mutually excluded projects? What if they aren’t excluding? Explain your choice and justify your answer.

d) Can we use either the NPV or the IRR criteria in order to decide which project to undertake?

e) For which levels the opportunity cost (or intervals) is preferable to carry out the project A or B?

 
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