Two Mutually Exclusive Projects Have the Following Positive NPVs and Project

Multiple Choice

Two mutually exclusive projects have the following positive NPVs and project lives. $\begin{array} { r c c } \text { Project } & \text { NPV } & \text { Life } \\\text { Project A } & \$ 5,000 & \text { 3 years } \\\text { Project B } & \$ 6,500 & \text { 5 years }\end{array}$ If the cost of capital were 15 percent, which project would you accept?

A) Project A, because it has higher EAC
B) Project B, because it has higher EAC
C) Project A, because its NPV can be earned more quickly
D) Project B, because it has higher NPV