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Practice Problem 5. A firm has a choice of spending $10 000 today on one of two projects. The revenue obtained from these projects is

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Practice Problem 5. A firm has a choice of spending $10 000 today on one of two projects. The revenue obtained from these projects is listed in Table 3.28. Assuming that the discount rate is 15% compounded annually, which of these two projects would you advise the com- pany to invest in? Table 3.28 Revenue ($) End of year Project A Project B 1 2 3 4 5 2000 2000 3000 3000 3000 1000 1000 2000 6000 4000

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