Consider two projects, Project J and Project K, with the following end of year cash flows:
End of year cash flows
Year
Project J
Project K
0
-$10,000
-$10,000
1
$2,900
$0
2
$2,900
$0
3
$2,900
$0
4
$2,900
$12,600
If these projects are mutually exclusive and have a cost of capital of 5 percent, the appropriate decision is to: (Hint: Should we use NPV or IRR in this situation?)