Q3. You are considering the following two mutually exclusive projects. The required rate of return...
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Q3. You are considering the following two mutually exclusive projects. The required rate of return is 12.2 percent for project A and 11.5 percent for project B. Which project should be accepted and why? (Hint: Use NPV formula in excel)
Project A
Project B
Rate
12.20%
11.50%
Initial Investment
54,000
54,000
Year
1
Year
2
Year
3
PV of Cash Flows
less investment
Should this project be accepted or rejected? Why?
Answer & Explanation
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