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Assume the firm can either take Project A or Project B. Project A will require the initial investment of $80,000 and will yield $15,000 at
Assume the firm can either take Project A or Project B. Project A will require the initial investment of $80,000 and will yield $15,000 at Year 1, $16,000 at Year 2, $19,000 at Year 3, $30,000 at Year 4, $27,000 at Year 5, and $26,000 at Year 6. Project B will require the initial investment of $75,000 and yield $15,000 at Year 1, $16,000 at Year 2, $18,000 at Year 3, $19,000 at Year 4, $30,000 at Year 5, and $28,000 at Year 6. If the interest/discount rate that applies to both project is 12.9%, which of these two projects is a better option if the decision is made based on the Net Present Value (NPV) basis? O Project A Project B O There is no difference There is insufficient information to make a decision Question 10 2.5 pts Same facts above: what if the decision is made based on the Profitability Index basis? O Project A O Project B There is no difference There is insufficient information to make a decision
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