Question
Consider the following cash flows on two mutually exclusive projects: Year Project A 0 42,000 Project B 53,000 1 21,000 24,000 23 3 17,000
Consider the following cash flows on two mutually exclusive projects: Year Project A 0 42,000 Project B 53,000 1 21,000 24,000 23 3 17,000 19,000 25,000 23,000 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 11 percent and the inflation rate is 4 percent. Calculate the NPV for each project. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project A Project B NPV Which project should you choose?
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
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