Question

Explanation please.PW of Project A is - $5,000. PW of Project B is - $6,000. PW of Project C is - $7,000. These are independent service projects and are mutually exclusive. Which project(s) should be selected? Group of answer choices Project B and C Project A and B Project A Project A and C Project C Project A, B, and C Project B

Answer 1

Answer:

Project A's PW is max. (-)$5,000.

Explanation:

Since such projects are separate and mutually exclusive, the project with the highest present value will be selected, since PW represents the total of all discounted cash inflows and outflows.  

Because project A's PW is max. (-)$5,000.

Note that only 1 project will be chosen as these are mutually exclusive, meaning that the other two can not be chosen if either is selected.