A company is considering investing in a new production line that will cost $2 million. The production
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A company is considering investing in a new production line that will cost $2 million. The production line is expected to generate annual cash flows of $500,000 for the next 6 years. The company's cost of capital is 10%. The company is also considering investing in a research and development project that will cost $1 million. The R&D project is expected to generate annual cash flows of $400,000 for the next 8 years. The company can only choose one of these projects. Which project should the company choose based on the net present value (NPV) method?
Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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