As the director of capital budgeting for ABC Corporation

As
the director of capital budgeting for ABC Corporation, you are
evaluating two mutually exclusive projects with the following net cash
flows:

Cash Flows

A B

-$200,000 -$125,000

1 $65,000 $60,000

2 $60,000 $40,000

3 $50,000 $40,000

4 $65,000 $35,000

5 $50,000 $45,000

If ABC Corporation’s cost of capital is 12 percent, defend which project would you choose.