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Consider the following two projects A and B. Assume that the appropriate discount rate for each...

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Finance

Consider the following two projects A and B. Assume that theappropriate discount rate for each project is 20%.

Year CF for Project A CF for Project B

0 -$100 - $1,700

1 70 900

2 80 900

3 90 900

If projects A and B are independent projects, which project(s)should you accept based on your best capital budgeting criteria?Please explain your rationale.

If projects A and B are mutually exclusive projects, whichproject(s) should you accept based on your best capital budgetingcriteria? Please explain your rationale.

Answer & Explanation Solved by verified expert
4.0 Ratings (467 Votes)
Project A Net present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 100 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be entered Press Enter and down arrow after    See Answer
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