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2) The company has two investment projects, which have the following characteristics given below: End of Year Project A Project B 0 -$1
2) The company has two investment projects, which have the following characteristics given below:
|
End of Year |
Project A |
Project B |
|
0 |
-$1.600 |
-$1.600 |
|
1 |
$1.000 |
$400 |
|
2 |
$750 |
$600 |
|
3 |
$400 |
$1.150 |
Note: Please show how you compute each of the items.
a) Compute the Fisher’s rate between the Project A and Project B.
b) Which project is the best for the firm if the discount rate %22?
c) If the firm value $9.800 before Project A, how much will it be after the Project?
(Assumption: discount rate for Project A is 7%)
Expert Solution
PFA
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