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You are considering two independent projects with the same discount rate of 12 %. Project A costs KD 908 and has cash flows of KD
You are considering two independent projects with the same discount rate of 12 %. Project A costs KD 908 and has cash flows of KD 116 KD 459 and KD 440 for Years 1 to 3, respectively. Project B costs KD 908 and has a cash flow of KD 732 a year for Years 1 to 3. You have sufficient funds to finance any decision you make. Which project or projects, if either, should you accept and why? You are working on a bid for a contract. Thus far, you have determined that you will need KD 326 for fixed assets and another KD 510 for net working capital at Time 0. You have also determined that you can recover KD 678 aftertax for the combined fixed assets and net working capital at the end of the 4-year project. What operating cash flow will be required each year for the project to return 10 % in nominal terms
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