Question: You have two projects. Project A costs $100 today and will generate a cash flow of $120 in a year. Project B costs $50 that

You have two projects. Project A costs $100 today and will generate a cash flow of $120 in a year. Project B costs $50 that is paid in a year from today and will generate a cash flow of $62 in two years from today. The opportunity cost of capital for both projects is 10%.

Which project would you choose if projects A and B are mutually exclusive (i.e., you can only choose one project) and why?

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