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5. Your company is choosing two equally risky, mutually exclusive projects with the cash flows shown below. Your cost of capital is 10%. How
5. Your company is choosing two equally risky, mutually exclusive projects with the cash flows shown below. Your cost of capital is 10%. How much value will your firm sacrifice (in terms of decline in NPV) if it selects the project with the higher IRR. To answer the question, you need to find the NPV and the IRR for both projects first. Make sure you show the NPV and IRR for both projects (6 points) Year Project S Cash Flow Year Project L Cash Flow 0 -$1,000 0 -$2,000 1 500 1 668.76 2 500 3 500 2 3 4 5 668.76 668.76 668.76 668.76
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