The Wan-Ki Manufacturing Company must decide between investment projects A and B, which are mutually exclusive. The data on these projects are as follows (in thousands of dollars):
Cash Flows, per Year
|
Project
|
0
|
1
|
2
|
3
|
4
|
|
A
|
(100)
|
$120.00
|
|
|
|
|
B
|
(100)
|
|
|
|
$193.80
|
(a) For each project, compute the NPV at 12 percent cost of capital, and the IRR. (b) Explain why the rankings conflict. Recommend which project should be chosen.