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Suppose, a company considers two alternative expansion projects. The first project requires initial outlay of -$100,000;...

Suppose, a company considers two alternative expansion projects. The first project requires initial outlay of -$100,000; and the second one costs less: - $7,000. Subsequent incremental cash flows from the more expensive project will be $27,000 for 5 years. The cash flows from the second alternative will be lower: $4,000 for 3 years. Which expansion project would you recommend the company undertakes and why? WACC is 7%.

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ekkarill92 answered 3 months ago
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