Question: You are considering two mutually exclusive projects. Both projects have an initial cost of $52,000. Project A produces cash inflows of $25,300, $37,100, and $22,000

You are considering two mutually exclusive projects. Both projects have an initial cost of $52,000.
Project A produces cash inflows of $25,300, $37,100, and $22,000 for years 1 through 3, respectively.
Project B produces cash inflows of $43,600, $19,800 and $10,400 for years 1 through 3, respectively. The required rate of return is 14.2 percent for Project A and 13.9 percent for Project B. Which project should you accept and why?

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Project A Year Cash flows PVF 11 PVF Cash flows 0 52000 1 52000 1 25300 0875656743 2... View full answer

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