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samualson samualson
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Your company is considering an investment in one of two mutually exclusive projects. Project 1 involves a labor intensive production process. Initial outlay for Project 1 is $1,495 with expected after-tax cash flows of $500 per year in years 1-5. Project 2 involves a capital intensive process, requiring an initial outlay of $6,704. After-tax cash flows for Project 2 are expected to be $2,000 per year for years 1-5. Your firm's discount rate is 10%. If your company is not subject to capital rationing, which project(s) should you take on?
A) Project 1
B) Project 2
C) Projects 1 and 2
D) Neither project is acceptable.
Textbook 
Foundations of Finance

Foundations of Finance


Edition: 9th
Authors:
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DeanaRayDeanaRay
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samualson Author
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#2
5 years ago
Helps a lot... Now I'm ready for my quiz
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