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

11

percent and the inflation rate is

3

percent. Calculate the NPV for each project.

Which project should you choose?

Consider the following cash flows on two mutually exclusive projects: The

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