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You have two projects to consider. Both have 4-years of cash flows and a 4% discount rate is appropriate for both projects. The cash flows
You have two projects to consider. Both have 4-years of cash flows and a 4% discount rate is appropriate for both projects. The cash flows for project X have a present value of $362.99.
| Present Value @ 4% | End of Year 1 | End of Year 2 | End of Year 3 | End of Year 4 |
Project X | 362.99 | 100 | 100 | 100 | 100 |
Project Y |
| -100 | -100 | -100 | -100 |
Which of the following is correct?
- You would accept project X if the initial outlay is less than $362.99.
- You would accept project Y if you are paid more than $362.99 at Year 0.
- Both (a) and (b) are true.
- Neither (a) nor (b) is true.
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