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2) Amana Ltd. has two proposed capital investment projects, projects A and B. Both the projects are hi-tech power systems for office maintenance. Each project
2) Amana Ltd. has two proposed capital investment projects, projects A and B. Both the projects are hi-tech power systems for office maintenance. Each project has a cost of Rs. 10,000,000 and the cost of capital for both projects is 12%. The projects' expected net cash flows are as follows: Year 0 Project A (Cash Outflow/ Inflow) (Rs.000') (10,000) 6,000 4,000 3,000 1,000 Project B (Cash Outflow/Inflow) (Rs.000') (10,000) 3,000 4,500 3,500 3,000 1 2 3 4 (i) Calculate each project's payback period, net present value (NPV), profitability index, and internal rate of return (IRR). (ii) Should both projects be accepted if they are interdependent? (iii) Which project should be accepted if they are mutually exclusive
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