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6.39 Consider the cash flows for the following investment projects (MARR = 15%): %3D Project's Cash Flow A B C - $2,500 - $4,000 - $5,000 1 1,000 1,600 1,800 2 1,800 1,500 1,800 3 1,000 1,500 2,000 4 400 1,500 2,000 (a) Suppose that projects A and B are mutually exclusive. Which project would you select, based on the AE criterion? (b) Assume that projects B and C are mutually exclusive. Which project would you select, based on the AE criterion?

6.39 Consider the cash flows for the following investment projects (MARR = 15%): %3D Project's Cash Flow A B C - $2,500 - $4,000 - $5,000 1 1,000 1,600 1,800 2 1,800 1,500 1,800 3 1,000 1,500 2,000 4 400 1,500 2,000 (a) Suppose that projects A and B are mutually exclusive. Which project would you select, based on the AE criterion? (b) Assume that projects B and C are mutually exclusive. Which project would you select, based on the AE criterion?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 7P
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6.39 Consider the cash flows for the following investment projects (MARR = 15%): Project's Cash Flow A B C - $2,500 - $4,000 - $5,000 1 1,000 1,600 1,800 1,800 1,500 1,800 3 1,000 1,500 2,000 4 400 1,500 2,000 (a) Suppose that projects A and B are mutually exclusive. Which project would you select, based on the AE criterion? (b) Assume that projects B and C are mutually exclusive. Which project would you select, based on the AE criterion?
Transcribed Image Text:6.39 Consider the cash flows for the following investment projects (MARR = 15%): Project's Cash Flow A B C - $2,500 - $4,000 - $5,000 1 1,000 1,600 1,800 1,800 1,500 1,800 3 1,000 1,500 2,000 4 400 1,500 2,000 (a) Suppose that projects A and B are mutually exclusive. Which project would you select, based on the AE criterion? (b) Assume that projects B and C are mutually exclusive. Which project would you select, based on the AE criterion?
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