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A firm has the following investment alternatives. Year Project A Cash Flow 0 $50,000 Project Cash Flow $50,000 SO 11 2 SO 3 15.625 15.625

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A firm has the following investment alternatives. Year Project A Cash Flow 0 $50,000 Project Cash Flow $50,000 SO 11 2 SO 3 15.625 15.625 15,625 15.625 15,625 $0 SO 5 99,500 The firm's cost of capital is 10%. Project A and B are mutually exclusive. Which investment(s) should the firm make? Project B because it has the higher NPV Project B because it has the higher IRR Project A because it has the higher NPV A. Project A because it has the higher IRR A. Neither because both have IRRs less than the cost of capital

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