a) Answer parts i and i based on the information below: Project A has an initial outlay of $65,000. The project will generate the following cash inflows: $7,500 in one year, $8,000 in 2 years and...


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a) Answer parts i and i based on the information below:<br>Project A has an initial outlay of $65,000. The project will generate the following cash inflows: $7,500 in<br>one year, $8,000 in 2 years and $9,000 each year from the end of year 3 to the end of year 14 inclusive.<br>The cost of capital is 10% p.a. effective.<br>i.<br>Calculate the net present value (NPV) for Project A.<br>ii.<br>Project B has a net present value of -$200. If Project A and Project B are mutually exclusive<br>projects, which project should be accepted? Provide your reasons.<br>

Extracted text: a) Answer parts i and i based on the information below: Project A has an initial outlay of $65,000. The project will generate the following cash inflows: $7,500 in one year, $8,000 in 2 years and $9,000 each year from the end of year 3 to the end of year 14 inclusive. The cost of capital is 10% p.a. effective. i. Calculate the net present value (NPV) for Project A. ii. Project B has a net present value of -$200. If Project A and Project B are mutually exclusive projects, which project should be accepted? Provide your reasons.

Jun 09, 2022
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