A firm is trying to determine which of two products it should launch. Product A has an expected life of three years. It will bring in cash flows of $11,000 in each of the three years. Product B has an expected life of two years. It will bring in cash flows of $15,500 in each of the two years. Assume a discount rate of 8%. Which product should the firm, based on NPV alone, select?
a. Product A
b. Product B
c. Product A and B are equivalent
d. NPV for the products cannot be calculated with the information given.
a. Product A
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