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Should firm choose if cost of capital twenty-five percent

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Problem 1: Consider the following projects, X and Y where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project B also costs $600, and generates cash flows of $500 and $275 for the next 2 years, respectively. Which investment if any, should the firm choose if the cost of capital is 25 percent?

1. Project X
2. Project Y.
3. Neither.
4. Not enough information to tell.

Reference no: EM132645321

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