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6. The information on two mutually exclusive alternatives considered for investment is given below. If the investment period is for 5 years with an
6. The information on two mutually exclusive alternatives considered for investment is given below. If the investment period is for 5 years with an interest rate of 10%, determine the Net Present Value (NPV or NPW) of both and identify which alternative should we choose? Sketch the cash flow diagram for each case. (15 points) Alternative Initial Cost Benefits $250 at the end of year 1 to year 3, and $450 for the next two years A $1,300 B $5,000 $780 at the end of every year, with a salvage value of $1,500.
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