Suppose your boss has asked you to analyze two mutually exclusive projects - project a and project b. both projects require the same investment amount, and the sum of cash inflows of project a is larger than the sum of cash inflows of project b. a coworker told you that you do not need to do an npv analysis of the projects because you already know that project a will have a larger npv than project b. do you agree with your coworker's statement?

a. yes, project a will always have the largest npv, because its cash inflows are greater than project b's cash inflows.

b. no, the npv calculation will take into account not only the project's cash inflows but also the timing of cash inflows and outflows. consequently, project b could have a larger npv than project a, even though project a has larger cash inflows.

c. no, the npv calculation is based on percentage returns. so, the size of the project's cash flows does not affect a project's npv.

Make or buy eastside company incurs a total cost of $120,000 in producing 10,000 units of a component needed in the assembly of its major product. the component can be purchased from an outside supplier for $11 per unit. a related cost study indicates that the total cost of the component includes fixed costs equal to 50% of the variable costs involved. a. should eastside buy the component if it cannot otherwise use the released capacity? present your answer in the form of differential analysis. use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers. cost from outside supplier $answer variable costs avoided by purchasing answer net advantage (disadvantage) to purchase alternative $answer b. what would be your answer to requirement (a) if the released capacity could be used in a project that would generate $50,000 of contribution margin? use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers.