Which project should cleveland accept

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Reference no: EM13145216

Cleveland Corp. can accept only one of two projects. The revenue and expenses for each of the projects is shown below. Which project should Cleveland accept if the corporation has a 8% cost of capital and a 40% marginal tax rate?

Project A Project B
Year 1 Revenue $700,000 $800,000
Expenses 500,000 525,000
Year 2 Revenue $600,000 $700,000
Expenses 425,000 550,000

Reference no: EM13145216

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