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DT consultancy is considering an investment of $100,000. The useful life of the project is 10 years. The cutoff period is three (3) years. The

DT consultancy is considering an investment of $100,000. The useful life of the project is 10 years. The cutoff period is three (3) years. The board of directors has identified two alternatives A and B. The expected annual cash flows are as follows:

Cost or Cash Flow

Alternative A

Alternative B

Initial cost

($100,000)

($100,000)

Cash flow year 1

35,000

35,000

Cash flow year 2

28,000

35,000

Cash flow year 3

32,000

35,000

Cash flow year 4

40,000

35,000

Q2. Suggest DT Consultancy which project is feasible to choose?(7 marks)

Q3. Mentions any three valid reasons for choosing the particular project (3 Marks)

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