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Using the project cash flows presented in Table 1, compute the NPV of each projects cash flows and determine for each project whether it should
Using the project cash flows presented in Table 1, compute the NPV of each projects cash flows and determine for each project whether it should be accepted or rejected. Assume that the cost of capital is 10%.
Table 1: Expected Net After-Tax Cash Flows
Year | Project A | Project B |
0 | ($2,000) | ($2,000) |
1 | 1,000 | 200 |
2 | 800 | 600 |
3 | 600 | 800 |
4 | 200 | 1,200 |
Whats Project As NPV? Should it be accepted?
A) $157.64; it should be accepted
B) $-157.64; it should be rejected
C) $153.68; it should be rejected
D) $-153.68; it should be rejected
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