Consider two projects. Project 1 costs $272,000 and returns $60,000 per year for 8 years. Project 2

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Consider two projects. Project 1 costs $272,000 and returns $60,000 per year for 8 years. Project 2 costs $380,000 and returns $70,000 per year. Project 2 is determined to be less risky, so your company only requires an 8 percent minimum annual return compared to 10 percent for project 1. What is the NPV of each project? What is the absolute maximum that the company should consider investing in each project?

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Accounting Information Systems

ISBN: 978-1260153156

2nd edition

Authors: Vernon Richardson, Chengyee Chang, Rod Smith

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