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1. The director of capital budgeting for a firm has identified two projects, A and B, with the following expected net cash flows: Both of
1. The director of capital budgeting for a firm has identified two projects, A and B, with the following expected net cash flows: Both of the projects have a cost of capital of 10 percent. 1a. What are Project A's and Project B's discount payback (DPB)? (10 points) DPB for A= DPB for B= 1b. What is the profitability index (PI) for Both Projects? (10 points) Profitability Index for A= Profitability Index for B= 1C What is the internal rate of return for Both Projects? (10 points) IRR for Project A = Id. Based on your findings above, what should the company do if both projects are independent of each ther? Why? What if both projects are mutually exclusive? ( 10 points)
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