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Your firm has estimated the following cash flows for two mutually exclusive capital investment projects. The firm's required rate of return is 13%. Year Project
Your firm has estimated the following cash flows for two mutually exclusive capital investment projects. The firm's required rate of return is 13%. Year Project A Cash Flow 0 -$100,000 1 28,900 2 28,900 3 28,900 4 28,900 5 28,900 Project B Cash Flow -$100,000 48,000 40,000 40,000 Which of the following statements best describes projects A and B? Project A should be accepted because it has the highest NPV. Project B should be accepted because it has the highest EAA. Project A should be accepted because it has the highest EAA. O Neither project is acceptable. O Both projects should be accepted because they have positive NPVs and EAAs. Your firm has estimated the following cash flows for two mutually exclusive capital investment projects. The firm's required rate of return is 13%. Year Project A Cash Flow 0 -$100,000 1 28,900 2 28,900 3 28,900 4 28,900 5 28,900 Project B Cash Flow -$100,000 48,000 40,000 40,000 Which of the following statements best describes projects A and B? Project A should be accepted because it has the highest NPV. Project B should be accepted because it has the highest EAA. Project A should be accepted because it has the highest EAA. O Neither project is acceptable. O Both projects should be accepted because they have positive NPVs and EAAs
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