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Consider these two mutually exclusive new 5-year projects. Assume the discount rate is 15%. Project A: The initial Investment is $850,000 Cash inflow will be
Consider these two mutually exclusive new 5-year projects. Assume the discount rate is 15%.
Project A:
The initial Investment is $850,000
Cash inflow will be $285,00 *Year 1 to year 5 each year.
Project B:
The initial Investment is $250,000
Year 1 cash inflow will be $100,000. Then, the cash flow will grow 10% per year for the year 2-5.
What project would you choose based on the PI rule?
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