Question: Jekyll & Hyde Corp. is evaluating two mutually exclusive projects. Their cost of capital is 15%. Costs & cash flows are given in the table. Determine which project should be accepted?
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Year
|
Cash flow
|
|
Project 1
|
Project 2
|
|
0
|
mce_markernbsp; (1,250,000)
|
mce_markernbsp; (1,250,000)
|
|
1
|
mce_markernbsp; 250,000
|
mce_markernbsp; 350,000
|
|
2
|
mce_markernbsp; 350,000
|
mce_markernbsp; 350,000
|
|
3
|
mce_markernbsp; 450,000
|
mce_markernbsp; 350,000
|
|
4
|
mce_markernbsp; 500,000
|
mce_markernbsp; 350,000
|
|
5
|
mce_markernbsp; 750,000
|
mce_markernbsp; 350,000
|