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a) What is the present value of $200,000 to be received in 4 years if the interest rate is 6% p.a. compounding monthly (12 times
a) What is the present value of $200,000 to be received in 4 years if the interest rate is 6% p.a. compounding monthly (12 times per year)? (4 marks) b) Consider two projects Big M and Big X. The firm is able to afford the investment into both projects. The board of directors has set a maximum acceptable payback period of 4 years. Which project/s should be selected? Show calculations (6 marks) Year Project Big M Project Big X O ($55,000) ($78,000) $10,000 $15,000 N $12,000 $18,000 m $16,000 $22,000 $25,000 $26,000
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