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You are considering the following two mutually exclusive projects. Should you accept or reject these...

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Finance

You are considering the following two mutually exclusive projects. Should you accept or reject these projects based on net present value (NPV) analysis? Assume the required rate of return is 10 percent for project Alpha and 8 percent for project Beta. Why or why not?

Year

Project Alpha

Project Beta

0

-$320,000

-$655,000

1

$292,000

$396,000

2

$165,000

$319,000

3

$107,000

$204,000

A. Project Alpha; because the NPV of the project Alpha is greater than the NPV of the project Beta.

B. Both; because Both projects have the positive NPV.

C. None; because both have the negative NPV.

D. Project Beta; because the NPV of the project Beta is greater than the NPV of the project Alpha

E. Project Alpha; because it has the higher required rate of return.

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