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Question:

Which project should you select and why?

A Alternative B, because its yield is higher than Alternative A’s yield.
explanation

This question requires discounted cash flow analysis to compare the value of Alternative A to Alternative B. Applying the present value formula to Alternative A, the formula is calculated this way: $21,000,000 / (1 + .05)^2 = $19,047,619. Alternative B is calculated this way: $29,000,000 / (1 + .05)^3 = $25,051,831.