Quorex Is Evaluating Two Mutually Exclusive Projects

Multiple Choice

Quorex is evaluating two mutually exclusive projects. Project A has a net investment of $48,000 and net cash flows over a six-year period of $12,500 per year. Project B also has a net investment of $48,000, but its net cash flows of $8,640 per year will occur over a 12-year period. If Quorex has a cost of capital of 14% for these projects, which project, if either, should be chosen, and what is its NPV?

A) Project A, $862
B) Project A, $1,800
C) Project B, $2,475
D) Project B, $902