RTE Telecom, Inc. is a U.S. firm that wants to expand its business internationally. It is...

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RTE Telecom, Inc. is a U.S. firm that wants to expand itsbusiness internationally. It is considering mutually exclusivepotential projects in both Germany and Mexico, and the Germanproject is expected to take six years, whereas the Mexican projectis expected to take only three years. However, the three-yearproject is repeatable. If the cost of capital for each project is10%, what is the difference in NPVs between the German and Mexicanprojects?
Project: German Project: Mexican
Year 0: -$1,120,000 Year 0: -$425,000
Year 1: $370,000 Year 1: $175,000
Year 2: $390,000 Year 2: $200,000
Year 3: $420,000 Year 3: $210,000
Year 4: $330,000
Year 5: $220,000
Year 6: $95,000
a) $169,753
b) $175,036
c) $185,953
d) $199,005
c) $210,398

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Option a is rightProjectGermanProjectMexicanYear See Answer

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RTE Telecom, Inc. is a U.S. firm that wants to expand itsbusiness internationally. It is considering mutually exclusivepotential projects in both Germany and Mexico, and the Germanproject is expected to take six years, whereas the Mexican projectis expected to take only three years. However, the three-yearproject is repeatable. If the cost of capital for each project is10%, what is the difference in NPVs between the German and Mexicanprojects?Project:GermanProject:MexicanYear 0:-$1,120,000Year 0:-$425,000Year 1:$370,000Year 1:$175,000Year 2:$390,000Year 2:$200,000Year 3:$420,000Year 3:$210,000Year 4:$330,000Year 5:$220,000Year 6:$95,000a) $169,753b) $175,036c) $185,953d) $199,005c) $210,398

Project:	German	Project:	Mexican
Year 0:	-$1,120,000	Year 0:	-$425,000
Year 1:	$370,000	Year 1:	$175,000
Year 2:	$390,000	Year 2:	$200,000
Year 3:	$420,000	Year 3:	$210,000
Year 4:	$330,000
Year 5:	$220,000
Year 6:	$95,000