Transcribed Image Text
Your firm has estimated the following cash flows for twomutually exclusive capital investment projects. The firm's requiredrate of return is 13%. Use this information for the next 3questions.Year Project A Cash Flow Project B CashFlow0 -$100,000 -$100,0001 28,900 48,0002 28,900 40,0003 28,900 40,0004 28,9005 28,900Which of the following statements best describes projects A andB?a) Project A should be accepted because it has the highestNPV.b) Project A should be accepted because it has the highestEAA.c) Project B should be accepted because it has the highestEAA.d) Both projects should be accepted because they have positive NPVsand EAAs.e) Neither project is acceptable.