Consider two mutually exclusive projects

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Reference no: EM132000808

Consider two mutually exclusive projects, either of which would be undertaken without future replacement. Project A would cost $10 million and would save $4 million per year for 5 years, after which (at year 5) it would cost $1 million to remove. Project V would cost $13 million and would save $6 million per year for 4 years, after which it would cost $3 million to remove. If your cost of capital is 12%, compute the NPV of each and indicate which project, if any, you should select.

Reference no: EM132000808

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