Question: You are considering the following two mutually exclusive projects with the following cash flows. Both projects will be depreciated using straight-line depreciation to a zero
You are considering the following two mutually exclusive projects with the following cash flows. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value Year 10 1 2 3 Project A $45,000 $17,500 $18,000 $22.500 Project B $40,000 $8.200 $14,600 $36.800 Required rate of return Required payback period Required accounting return Project A 8 percent 2 years 8.5 percen Project B 12 percent 2 years 9.5 percent You should accept Project because its net present value exceeds that of the other project by
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