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Calculate net present value and actual rate of return

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Reference no: EM132589799

Question a) Which is preferable? An interest rate of 7.5% p.a. compounding daily or an interest rate of 7.30% p.a. compounding weekly?

Question b) A construction company has identified the following two mutually exclusive projects. The company used 10% discount rate

Year          Cash flows (Project A)              Cash flows (Project B)

0                    ($100,000)                              ($100,000)

1                          50,000                               40,000

2                           40,000                             40,000

3                            30,000                            40,000

4                            30,000                                40,000

Calculate Net Present Value and Actual Rate of return for both the projects. How will you evaluate each project using these project evaluation methods?

Reference no: EM132589799

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