Question

t 0 1 2 3 Project A -100 10 10 400 Project B -100 100 10...

t

0

1

2

3

Project A

-100

10

10

400

Project B

-100

100

10

10

Suppose the cost of Capital of project A is 4%, while the cost of capital for project B is 5%. At t=3, what is the cash flow for project B that makes you indifferent between A and B?

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Answer is $ 312.73

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