HH Companies has identified two mutually exclusive projects. Project A has cash flows of -$40,000, $21,200, $16,800, and $14,000 for Years 0 to 3, respectively. Project B has a cost of $38,000 and annual cash inflows of $25,500 for 2 years. At what rate would you be indifferent between these two projects?
A) 6.34 percent
B) −1.72 percent
C) 9.41 percent
D) −4.38 percent
E) 8.28 percent

Question

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The Answer of HH Companies has identified two mutually exclusive projects. Project A has cash flows of -$40,000, $21,200, $16,800, and $14,000 for Years 0 to 3, respectively. Project B has a cost of $38,000 and annual cash inflows of $25,500 for 2 years. At what rate would you be indifferent between these two projects?
A) 6.34 percent
B) −1.72 percent
C) 9.41 percent
D) −4.38 percent
E) 8.28 percent

HH Companies Has Identified Two Mutually Exclusive Projects