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You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the
You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value. Project A Project B Year 10 1 2 3 Required rate of return Cash Flow Year -$75,0000 Cash Flow -$70,000 $19,0001 $10,000 $48,000 2 $16,000 $12,000 3 $72,000 10 percent 13 percent Required 2.0 years 2.0 years payback period Required accountin 8 percent 11 percent g return Based upon the profitability index (PI) and the information provided in the problem, you should:
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