Determine what is the preferred project after four years

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An entrepreneur has to decide between two possible investment projects. Both projects cost $80.000 upfront. The short term project pays $35.000 for the next three years. The long term project pays $120.000 after four years. Alternatively the entrepreneur can put the money in a bank account that pays 8% per year. What is the preferred project? Does your answer change if the bank account interest rate is 15%? Briefly explain your results.

Reference no: EM13327381

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