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Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 -$57,000 -$72,000 1 37,000 36,000 2 32,000 45,000 3
Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 -$57,000 -$72,000 1 37,000 36,000 2 32,000 45,000 3 27,000 48,000 The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 10 percent and the inflation rate is 2 percent. Calculate NPV for each project.
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