Considering two mutually exclusive projects

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Reference no: EM131448789

Good old XYZ Corp. is considering two mutually exclusive projects, A & B in order to expand their product line. After letting the cost accountants out of their cages, it was determined that project A’s initial investment must be $42,400, while project B will cost $60,000. Project A has projected CFs of $25,000 per year for 3years, while project B inflows are more variable: $10,000 in a year 1; $30,000 in a year 2; and $40,000 in its final year 3. You have determined the following, The prime = 7%; Labor = 6%; the firm’s cost of capital = 12%; and the risk-free rate = 3%

Reference no: EM131448789

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