Question
15. Tara has enough money to invest in the good projects. The projects beings evaluated are independent and have the following characteristics: Cash Flows Year
15. Tara has enough money to invest in the good projects. The projects beings evaluated are independent and have the following characteristics: Cash Flows Year Project Q Project R 0 $(5,000) $(5,000) 1 0 3,000 2 5,000 2,200 If the firm's required rate of return (r) is 8 percent, which project should be purchased? a. Both projects should be purchased. b. Neither project should be accepted. c. Project Q should be accepted, because its net present value (NPV) is positive and higher than Project R's NPV. d. Project R should be accepted, because its net present value (NPV) is higher than Project Q's NPV. e. None of the above is a correct answer.
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