Which project should be accepted and why

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Question - Two mutually exclusive projects have an initial cost of $50,000 each. Project A produces cash inflows of $30,000, $35,000, and $25,000 for Years 1 through 3, respectively. Project B produces cash inflows of $45,000, $35,000 and $10,000 for Years 1 through 3, respectively. The required rate of return is 13.0 percent for Project A and 16.0 percent for Project B. Which project(s) should be accepted and why?

Reference no: EM133173483

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