Question

You are trying to determine which of two none mutually exclusive projects to undertake. Project Adam has an initial outlay of $10,000, an NPV of $4,392.15, an IRR of 1 1.33%, and an EAA of $1,158.64. Project Eve has an initial outlay of $15,000, an NPV of $5,833.73, an IRR of 9.88%, and an EAA of $1 0 3.50 The cost of capital for both projects is 9%, and the prolects have different lives. If the projects are not repeatable, then: You should do both projects because they have positive NPVs. You should do Project Adam because it has a higher EAA You should do Project Eve because it has a higher NPV. You should do Project Adam because it has a higher IRR. You should do neither projects since neither of them adds value to you.

Answer 1

If the projects are not mutually exclusive then we can go with the project who have positive NPVs.

As it is given that none of them mutually exclusive and both the projects have positive NPVs, we should select both the projects. positive NPV implies addition to the wealth of shareholders.

Answer : option 1 : You should do both the projects because they have positive NPVs (Thumbs up please)