Question: Consider the following cash flows on two mutually exclusive projects: The cash flows of project A are expressed in real terms, whereas those of project

Consider the following cash flows on two mutually exclusive projects:

The cash flows of project A are expressed in real terms, whereas those of project B are expressed in nominal terms. The appropriate nominal discount rate is 13 percent and the inflation rate is 4 percent. Which project should you choose?

Year Project A -$50,000 30,000 25,000 20,000 Project B -$65,000 29,000 38,000 41,000

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