Assume that you are considering two mutually exclusive projects. Project A has an initial investment of $20 million dollars. It is expected to generate $3 million next year and the cash flow will grow at a rate of 4% per annum. Project B requires an initial investment of $35 million. It is expected to generate $5 million next year and the cash flow will grow at 3% per annum. Which project, if any, would you accept assuming a discount rate of 11%?

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