Creative Furniture Is Considering Two Mutually Exclusive Projects That Would

Multiple Choice

Creative Furniture is considering two mutually exclusive projects that would automate part of their production facilities. Project A costs $120,000 and would produce net cash flows of $37,000 annually for 5 years. Project B also costs $120,000 and will produce annual net cash flows of $25,000 for 10 years. Creative's cost of capital is 11 percent.
-Using the equivalent annual annuity method, which project should be chosen?

A) Project B, NPV is approximately $823 higher
B) Project A, NPV_B is negative
C) Project B, NPV is $10,473 approximately higher
D) Project B, NPV is $90.56 approximately higher