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Assume the firm can either take Project A or Project B. Project A will require the initial investment of $60,000 and will yield $12,000 at
Assume the firm can either take Project A or Project B. Project A will require the initial investment of $60,000 and will yield $12,000 at Year 1, $13,000 at Year 2, $14,000 at Year 3, $15,000 at Year 4, $25,000 at Year 5, and $26,000 at Year 6. Project B will require the initial investment of $70,000 and yield $14,000 at Year 1, $15,000 at Year 2, $16,000 at Year 3, $18,000 at Year 4, $29,000 at Year 5, and $28,000 at Year 6. If the interest/discount rate that applies to both project is 9.50%, which of these two projects is a better option if the decision is made based on the Profitability Index basis? There is insufficient information to make a decision O Project A O Project B There is no difference
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