Suppose that you have two possible projects. Project A gives a profit of 10 in period 0 and 9 in period 1. Project B gives a profit of 12 in period 0 and 6.5 in period 1. Suppose that the interest rate r = 0.05. Which project is better? (Hint: no matter when you want to consume, higher PDV is always better.)

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To determine which project is better we need to calculate their Present Discounted ... View the full answer