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Company A specializes in back-country tours and resort management. Company B specializes in making travel reservations and promoting vacation travel. A has an aftertax cost
Company A specializes in back-country tours and resort management. Company B specializes in making travel reservations and promoting vacation travel. A has an aftertax cost of capital of 15 percent and B has an aftertax cost of capital of 13 percent. Both firms are considering building wilderness campgrounds complete with man-made lakes and hiking trails. The estimated net present value of such a project is estimated at $100,000 at a discount rate of 13 percent and -$10,000 at a 15 percent discount rate. Which firm or firms, if either, should accept this project? Explain your answers
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