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Which project should be chosen if the required return

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Reference no: EM132956759

Problem 1: A company is considering two mutually exclusive investment projects. Each requires an initial investment of $25,000. Project A will generate an annual profit of $6,000 for eight years and have a residual value of $5,000. Project B's profits are more irregular: $15,000 in the first year, $19,000 in the fifth year and $24,000 (including the residual value) in the eighth year. Which project should be chosen if the required return on investment is 15% compounded annually?

Reference no: EM132956759

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