You are considering two independent projects. The required rate of return is 13.75 percent for Project A...

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Finance

You are considering two independentprojects. The required rate of return is 13.75 percent for ProjectA and 14.25 percent for Project B. Project A has an initial cost of$51,400 and cash inflows of $21,400, $24,900, and $22,200 for Years1 to 3, respectively. Project B has an initial cost of $38,300 andcash inflows of $23,000 a year for 2 years. Which project(s), ifeither, should you accept?
Accept both A and B
Reject both A and B
Accept A and reject B
Accept B and reject A
Accept either A or B but not both A and B

Answer & Explanation Solved by verified expert

3.6 Ratings (652 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 51400 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be entered Press Enter See Answer

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Transcribed Image Text

You are considering two independentprojects. The required rate of return is 13.75 percent for ProjectA and 14.25 percent for Project B. Project A has an initial cost of$51,400 and cash inflows of $21,400, $24,900, and $22,200 for Years1 to 3, respectively. Project B has an initial cost of $38,300 andcash inflows of $23,000 a year for 2 years. Which project(s), ifeither, should you accept?Accept both A and BReject both A and BAccept A and reject BAccept B and reject AAccept either A or B but not both A and B