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Consider the following two projects. Both have costs of $5000 in Year 1. Project 1 provides benefits of $2,000 in each of the first four years only. The second provides benefits of $2,000 for each of Years 6 to 10 only. Compute the net benefits using a discount rate of 6 percent. Repeat using a discount rate of 12 percent. Discuss what you conclude from this exercise.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91234058

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