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Consider capital budgeting projects A and B which yield the following cash flows over their five year lives. If the cost of capital for each
Consider capital budgeting projects A and B which yield the following cash flows over their five year lives. If the cost of capital for each project is 10%, what is accepted if mutually-exclusive?
Year | Investment A | Investment B |
0 | -$1,000 | -$1,000 |
1 | 500 | 100 |
2 | 400 | 200 |
3 | 200 | 200 |
4 | 200 | 400 |
5 | 100 | 700 |
Question 29 options:
Accept Project A only | |
Accept Project B only | |
Accept both Project A & B | |
Reject both Project A & B |
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