A company can pursue only one of two available projects, both of which require a...
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Accounting
A company can pursue only one of two available projects, both of which require a $3 million investment today. In project A another investment of $2 million is required at the beginning of the second year, and three years of $2.5 million in year-end profits will start in the second year. In project B, another investment of $2 million is required at the beginning of the fourth year, and four years of $1.7 million in year-end profits will start in the first year. If interest rate is 12% compounded annually, which project should be chosen? a) What is the value of Project A? b) What is the value of Project B? C) How much better is your chosen alternative
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