CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4 5 Project 1 -$350 $50 $50 $50 $210 $210 Project 2 -$650 $250 $250 $65 $65 $65
Which project would you recommend? Select the correct answer.
a. Both Projects 1 and 2, since both projects have IRR's > 0.
b. Neither Project 1 nor 2, since each project's NPV < 0.
c. Project 2, since the NPV2 > NPV1.
d. Both Projects 1 and 2, since both projects have NPV's > 0.
e. Project 1, since the NPV1 > NPV2.