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Suppose you are faced with choosing between two mutually exclusive different projects. The first project offers cash flows of $25,000 per year for 4 years,
Suppose you are faced with choosing between two mutually exclusive different projects. The first project offers cash flows of $25,000 per year for 4 years, and has an initial cost of $5,000. The second project offers cash flows of $25,000 per year for 8 years, and has an initial cost of $10,000. The firm has a weight average cost of capital of 12%. Which project should the firm accept?
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