Question: A firm is considering the following mutually exclusive projects: Year 0 1 2 3 Project A -2500 1500 ??? 1500 Project B -1500 1000 500

A firm is considering the following mutually exclusive projects:

Year

0

1

2

3

Project A

-2500

1500

???

1500

Project B

-1500

1000

500

1500

Assuming a rate of return of 10%, what must be the cash flow for Project A in year 2, for the firm to be indifferent for choosing these projects?

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