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You are considering an immediate investment (i.e., at t= 0) in one of two competing projects. Project Q is a 5-year project with an equivalent
You are considering an immediate investment (i.e., at t= 0) in one of two competing projects. Project Q is a 5-year project with an equivalent annuity, EAq, of $66. Project C is a 3-year project with an equivalent annuity, EAc, of $35. Whichever project you choose, you will clone it forever. Find the DIFFERENCE at t = 0 in the NPVs of the two perpetual sequences of cloned projects, NPV Qperp and NPV Cperp. Assume an annual discount rate of 9% for each project. (Acceptable error = $20) You are considering an immediate investment (i.e., at t= 0) in one of two competing projects. Project Q is a 5-year project with an equivalent annuity, EAq, of $66. Project C is a 3-year project with an equivalent annuity, EAc, of $35. Whichever project you choose, you will clone it forever. Find the DIFFERENCE at t = 0 in the NPVs of the two perpetual sequences of cloned projects, NPV Qperp and NPV Cperp. Assume an annual discount rate of 9% for each project. (Acceptable error = $20)
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