Question: 1. The Nelson Company is considering two mutually exclusive projects. The projected cash flows are as follows: Year Cash Flow A Cash Flow B 0

1. The Nelson Company is considering two mutually exclusive projects. The projected cash flows are as follows:

Year

Cash Flow A

Cash Flow B

0

-$280,000

-$250,000

1

$60,500

$50,000

2

$75,000

$35,000

3

$80,000

$70,000

4

$95,000

$150,000

a. The company uses a discount rate of 8%. Should the company go ahead with either project? Why or why not?

b. If the companys discount rate is 4.5%, should it go ahead with either project and if so which is the better one?

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