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Consider two competing investments in computer equipment. Each calls for an initial cash outlay of P100, and each returns P200 over the next five years

Consider two competing investments in computer equipment. Each calls for an initial cash outlay of

P100, and each returns P200 over the next five years making for a net gain of P100. But the timing of

the returns is different, as shown in the table below (Company A Limited and Company B Limited), and

therefore the present value of each year's gains is different. Using a 10% discount rate compute the

Net Present Value (NPV) of A Limited and B Limited and ascertain which company generates

better NPV.

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