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  1. business
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  3. consider the following two mutually exclusive proj

Consider the following two mutually exclusive projects and their Cash Flows ($) Project C0 C1...

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Accounting

Consider the following two mutually exclusive projects and their Cash Flows ($)

Project C0 C1 C2 C3

K $100 +$45 +$45 +$60

W $150 +$45 +$45 +$125

Which statement is correct based on the above information about Projects K and W?

a. If the discount rate is 7.5%, accept project W because the cross-over rate is 9%

b. Accept project K, because at a 9% discount rate K and W have the same net present value.

c. If the discount rate is 9.5%, reject project K, because the cross-over rate is 9%.

d. If the discount rate is 7.5%, accept project W because the IRR of W is 17%.

e. Accept project K because the IRR of K is larger than the IRR of W.

Notes: If possible, please provide the formulas and steps. Our class doesn't use a financial calculator either - only using time value of money math. Thank you!

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