Question: You are provided with the following data on two mutually exclusive projects. The cost of capital is 15%. Initial cash outflow Year 1 cash inflow
You are provided with the following data on two mutually exclusive projects. The cost of capital is 15%. Initial cash outflow Year 1 cash inflow Year 2 cash inflow Project 1 -$6,000 $6,000 $3,000 $1,486 1.25 Project 2 -$1,000 $1,000 $ 850 $ 512 NPV PI 1.51 Which project should you accept? What is the problem that you should be concerned with in making this decision? Project 1: the timing of cash flows O Project 1: project scale Project 2, project scale Project 2; the timing of cash flows
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