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An engineering company normally expects a rate of return of 13% on investments. Two projects are available but only one can be chosen. Project A
An engineering company normally expects a rate of return of 13% on investments. Two projects are available but only one can be chosen. Project A requires an immediate investment of $6,200. In return, a revenue payment of $4,500 will be received in four years and payment of $11,000 in seven years. Project B requires an investment of $2,500 now and another $2,000 in three years. In return, revenue payments will be received in the amount of $1,200 per year for seven years. Which project is preferable? The preferred alternative is Project B. Project A
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