Question:
As the director of capital budgeting for ABC Corporation, you are evaluating two mutually exclusive projects with the following net cash flows:
A B
-200,000 -125,000
1 65,000 60,000
2 60,000 40,000
3 50,000 40,000
4 65,000 35,000
5 50,000 45,000
If ABC Corporations cost of capital is 12%, defend which project you would choose.