6 Calculate the net present value of projects A and B, assuming discount rates of 0 per cent, 10 per cent and 20 per cent.

Which is the superior project at each level of discount rate? Why do they not all produce the same answer?

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A () B () Initial outlay 1,200 1,200 Cash receipts: Year 1 1,000 100 Year 2 500 600 Year 3 100 1,100