Project January has a NPV of $50,000, project December has a NPV of $40,000. Which of the following circumstances could make it possible to choose December over January?
A) January has a shorter payback period.
B) The projects are mutually exclusive.
C) The projects have unequal lives.
D) The projects are mandated.

Question

Quizplus · Accepted Answer

If the projects have unequal lives, it may be possible that project December has a higher NPV per year than project January, making it more attractive despite its lower total NPV. The other options listed do not provide a reason to choose December over January.

Project January Has a NPV of $50,000, Project December Has