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A company is looking at launching a new business line and is considering the following options: country A or country B, with the following initial
A company is looking at launching a new business line and is considering the following options: country A or country B, with the following initial investments and expected cash flows: | ||
Product A | Product B | |
II (initial investment) | 650,000 | 810,000 |
year 1 | 310,000 | 205,000 |
year 2 | 200,000 | 175,000 |
year 3 | 50,000 | 155,000 |
year 4 | 150,000 | 365,000 |
Where should the company expand, A or B, according to the payback period and IRR of each project? | ||
Considering that the discount factor is 4%, calculate the net present value and benefit cost ratio for each project and advise. |
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