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You have been given the following information on two mutually exclusive projects; use this information to calculate the present value of the costs and the
You have been given the following information on two mutually exclusive projects; use this information to calculate the present value of the costs and the benefits. Each project has a life of two years plus initial costs. Use a discount rate of 10% (0.1). Project A has an initial cost of $1,000 (hint initial costs are not discounted), and returns of $2,000 in year 1 and $3,000 in year 2. Project B will use land bought two years ago for $5,000. The project will have returns of $3,000 in year 1 and $4,000 in year two. The current market price of the land is $2,000. Project B will also provide benefits to two employees who will be transfer from another job. The employees' benefits will be the same as their current job and total $10,000 per employee. Hint: see tenets of cost-benefit analysis. a) Calculate the present value of costs and benefits for project A and project B for the initial period and the two time periods. Do these calculations separately
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