Selecting additional mutually exclusive projects

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Q1) Caledonia is considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows:

The required rate of return on these projects is 11 percent.

YEAR PROJECT A PROJECT B
0 -$100,000 -$100,000
1 32,000 0
2 32,000 0
3 32,000 0
4 32,000 0
5 32,000 $200,000

Answer the following:Which project should be accepted? Why?

 

Reference no: EM1338797

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