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Virus Stopper Inc., a supplier of computer safeguard systems, uses a cost of capital of 12...

Virus Stopper Inc., a supplier of computer safeguard systems, uses a cost of capital of 12 percent to evaluate average-risk projects, and it adds or subtracts 3 percentage points to evaluate projects of more or less risk. Currently, two mutually exclusive projects are under consideration. Both have a cost of $ 311 and will last 4 years. Project A, a riskier-than-average project, will produce annual end of year cash flows of $ 103 . Project B, of less than average risk, will produce cash flows of $ 315 at the end of Years 3 and 4 only.

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Since Project Initial Cash Time (n Annual Cash PROJECT A A is riskier Cost of Capital [r]= (2+3)= 15% out flow = $311 = 4 yeaPLEASE DON’T FORGET TO GIVE A THUMBS UP ??!!!

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