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Use in real-world decision making

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Consider two mutually exclusive projects and their present values. The first project pays benefits of $95 today and nothing else. The second project pays nothing today and $10,000 one hundred years from today. (ON SEPARATE SHEET)

A) Which project would be preferred if the annual discount rate were 0%? {Circle one} Project one Project 2

(Show your work) Present value of first project =

(Show your work) Present value of second project =

B) Which project would be preferred if the annual discount rate were 5%? {Circle one} Project one Project 2

(Show your work) Present value of first project =

(Show your work) Present value of second project =

C) Of the discounts rates suggested in parts A and B, which one would be of more use in real-world decision making? Why?

Reference no: EM132153307

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