Consider the following cash flows on two mutually exclusive projects: YearProject AProject B0 –$61,000 –$76,000 1 41,000 40,000
2 36,000 49,000 3 31,000 52,000 The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 12 percent and the inflation rate is 3 percent.
Calculate the NPV for each project.
Calculate the NPV for each project.
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