1. Projects A and B are mutually exclusive. Project A costs $10,000 and is expected to generate cash inflows of $4000 for four years. Project B costs $10,000 and is expected to generate a single cash flow in year 4 of $20,000. The cost of capital is 12 percent. Which project would you accept and why ?
2. What would you rather have? A $1,000,000 today or $20,000 every year for the next 50 years? This is the way the question is posed. No interest rate or any other variables are included.