Question: Here are the cash flow forecasts for two mutually exclusive projects: Cash Flows, Dollars Year Project A Project B 0 $100 $100 1 30 49

Here are the cash flow forecasts for two mutually exclusive projects: Cash Flows, Dollars Year Project A Project B 0 $100 $100 1 30 49 2 50 49 3 70 49 a. Which project would you choose if the opportunity cost of capital is 2 percent? b. Which would you choose if the opportunity cost of capital is 12 percent? c. Why does your answer change?

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