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1. XYZ Airways is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows: Year Project A Project

1. XYZ Airways is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows: Year Project A Project B 0 -$42,000 -$45,000 1 14,000 28,000 2 14,000 12,000 3 14,000 10,000 4 14,000 10,000 5 14,000 10,000 1. Compute the NPV, IRR, payback period and Profitability Index for each project. The cost of capital is 10%. Based on your analysis, which project would you choose and why? 2. Compute the crossover rate.

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