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5. Lopez Industrics has identified the following two mutually exclusive capital investment projects: Ycar Project A Cash lows Project B Cashh Hows -$16,000 400 800

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5. Lopez Industrics has identified the following two mutually exclusive capital investment projects: Ycar Project A Cash lows Project B Cashh Hows -$16,000 400 800 13,000 14,000 -$15,500 12,500 8,000 800 800 What is the IRR for each of these projects? If you apply the IRR decision rule, which project should the company accept? Is this decisionnecessarily correct? a) If the required return is 11 %, what is the NPV for each of these projects? Which project should the firm accept if they apply the NPV rule? b) 129

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