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As the capital budgeting director for Denver Corporation, you are evaluating two

ID: 2688531 • Letter: A

Question

As the capital budgeting director for Denver Corporation, you are evaluating two mutually exclusive projects with the following net cash flows: Project X Project Z Year Cash Flow Cash Flow 0 -$100,000 -$100,000 1 50,000 10,000 2 40,000 30,000 3 30,000 40,000 4 10,000 60,000 If Denver's WACC is 15%, which project would you choose? Answer Neither project. Project X, since it has the higher IRR. Project Z, since it has the higher NPV. Project X, since it has the higher NPV. Project Z, since it has the higher IRR.

Explanation / Answer

Neither project.