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7-2 Initial costs, year-end cash flows for two mutually exclusive investments being considered by Stanford Partners follow. The required return is 10 percent. Which investment

7-2

Initial costs, year-end cash flows for two mutually exclusive investments being considered by Stanford Partners follow. The required return is 10 percent. Which investment should be chosen? Why?

Year 0 1 2 3

R -4000 1000 1000 5000 S -5000 5000 1000 1000

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