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Starting from year 1, Project A offers to pay you $500 every year for 10 years,...

  1. Starting from year 1, Project A offers to pay you $500 every year for 10 years, whereas Project B offers to pay you $520 for the first year and a yearly increased amount for the next 8 years after year 1. Project B’s payment in year t+1 will be 2% higher than its payment in year t. In year 0, Project A costs $2200 while Project B costs $2250. If the discount rate for Project A is 10% and for Project B is 12%, which one of these two investment opportunities would you pick?

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jeff jeffy answered 1 year ago
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