Show the calculations that lead to the conclusions

Reference no: EM13183709

Consider the following two projects

Project A: Costs $10,000 today. Increases profit by $4000 next year and $7,200 the year after that

Project B: Costs $6000 today. Increases profit in two years by $6678

A firm faces a rate to borrow money of 8% and has the option of investing money with almost no risk at 6%.

a) If the firm has $20,000 on hand, with only these two project to choose from, will they invest in A, B, neither or both? Show the calculations that lead to your conclusions. Explain whether you answers would be different for either project if the firm had no money on hand to invest

Reference no: EM13183709

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