XYZ plc is a budget hotel chain, trading in the UK and some parts of the Europe.
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Question:
XYZ plc is a budget hotel chain, trading in the UK and some parts of the Europe. Currently, some services: laundrette and hotel software system have been outsourced due to lack of available resources. However, strategic managers of XYZ plc are looking to invest in a software or a laundrette project. They have called new business proposals and finally, chosen two projects in managers' discretion to make final decision.
Initial investment required for project A (Software) is 100,000 and for project B (Laundrette) is 120,000. The discount rate required is at 11%. The net cash flows for two projects can be summarized as below:
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