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Business, 20.09.2020 09:01 rsloan13

Assume that your firm wants to choose between two project options: • Project A: $500,000 invested today will yield an expected income stream of $150,000 per year for five years, starting in Year 1. • Project B: an initial investment of $400,000 is expected to produce this revenue stream: Year1=0,Year1=0, Year2=$50,000,Year2=$50,000, Year3=$200,000,Year3=$200,000, Year4=$300,000,Year4=$300,000, and Year5=$200,000.Year5=$200,000. Assume that a required rate of return for your company is 10% and that inflation is expected to remain steady at 3% for the life of the project. Which is the better investment? Why?

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