Question
The Amazon State is faced with one choice between two projects, project (A) is to build stations for alternative energies, or project (B) is to
The Amazon State is faced with one choice between two projects, project (A) is to build stations for alternative energies, or project (B) is to build a continental road. The total cost is equal between Project A and B, and the total cost is $2000 million for each project, the interest rate is 10%, and the return from the project in the five years varies as follows:
| Year | Project (A) in million dollar | Project (B) in million dollar |
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| 1 | 750 | 450 |
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| 2 | 400 | 450 |
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| 3 | 750 | 450 |
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| 4 | 300 | 450 |
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| 5 | 15 | 450 |
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Under these circumstances,
- What is the present value of Project A, B?
- Which projects of economic feasibility require implementation?
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
12th Edition
978-0073526706, 9780073526706
