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The following are the cash flows of two projects: Year Project A $ (200) 80 80 80 Project B $ (200) 100 100 100 AWN If the op

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Answer #1

NPV of Project A = -200 + 80/(1.11) + 80/(1.11)2 + 80/(1.11)3 + 80/(1.11)4

NPV of Project A = $48.20

NPV of Project B = -200 + 100/(1.11) + 100/(1.11)2 + 100/(1.11)3

NPV of Project B = $44.37

PI = (NPV + Initial Investment)/Initial Investment

PI of Project A = (48.20 + 200)/200

PI of Project A = 1.2410

PI of Project B = (44.37 + 200)/200

PI of Project B = 1.2219

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