Pixar Co. is considering the following two mutually exclusive projects.The cash flows for project A are expressed

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Pixar Co. is considering the following two mutually exclusive projects.The cash flows for project A are expressed in real terms, while those of project B are expressed in nominal terms.The appropriate nominal discount rate is 10% and the inflation rate is 3%.Using the exact Fisher equation,

Year Project A Project B

0 -55,000 -64,000

1 22,000 34,000

2 43,000 37,000

3 15,000 25,000

1.Using the exact Fisher equation, calculate the real discount rate.(Enter percentages as decimals and round to 4 decimals).

2.Calculate the NPV for project A.(Round to 2 decimals)

3.Calculate the NPV for project B.(Round to 2 decimals)

4.Based on the information provided, the firm should:

a. accept A, reject B

b. accept both

c. reject A, accept B

d. reject both

Posted Date: May 17, 2024 05:09 PM

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Pixar Co. is considering the following two mutually exclusive projects.The cash flows for project A are expressed

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