Question: Here are the cash-flow forecasts for two mutually exclusive projects: a. Which project would you choose if the opportunity cost of capital is 2%? b.

Here are the cash-flow forecasts for two mutually exclusive projects:

a. Which project would you choose if the opportunity cost of capital is 2%?
b. Which would you choose if the opportunity cost of capital is 12%?
c. Why does your answer change?

Cash Flows (dollars) Year Project A Project B -100 30 50 70 100 49 49 49 0 2

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