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Suppose a company has two mutually exclusive projects, both of which are three years in length....

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Finance

Suppose a company has two mutually exclusive projects, both ofwhich are three years in length. Project A has an initial outlay of$7,000 and has expected cash flows of $3,000 in year 1, $4,000 inyear 2, and $4,000 in year 3. Project B has an initial outlay of$10,000 and has expected cash flows of $2,000 in year 1, $4,000 inyear 2, and $5,000 in year 3. The required rate of return is 12%for projects at this company. What is the net present value for thebest project? (Answer to the nearest dollar.)

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3.9 Ratings (739 Votes)
Project A Net present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 7000 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be    See Answer
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Suppose a company has two mutually exclusive projects, both ofwhich are three years in length. Project A has an initial outlay of$7,000 and has expected cash flows of $3,000 in year 1, $4,000 inyear 2, and $4,000 in year 3. Project B has an initial outlay of$10,000 and has expected cash flows of $2,000 in year 1, $4,000 inyear 2, and $5,000 in year 3. The required rate of return is 12%for projects at this company. What is the net present value for thebest project? (Answer to the nearest dollar.)

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