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Firm AAA has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 29,500 $ 29,500 1 14,900 4,550
Firm AAA has identified the following two mutually exclusive projects: |
Year | Cash Flow (A) |
| Cash Flow (B) | ||||
0 | $ | 29,500 |
|
| $ | 29,500 |
|
1 |
| 14,900 |
|
|
| 4,550 |
|
2 |
| 12,800 |
|
|
| 10,050 |
|
3 |
| 9,450 |
|
|
| 15,700 |
|
4 |
| 5,350 |
|
|
| 17,300 |
|
(Please use financial calculator sovle question)
- At what discount rate would the company be indifferent between these two projects?
- Which project will be more favorable if the firm cant raise the money at this rate?
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