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A firm with a 10% cost of capital and a cutoff payback period of three years faces two mutually exclusive investment opportunities with the following

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A firm with a 10% cost of capital and a cutoff payback period of three years faces two mutually exclusive investment opportunities with the following CF projections. Year o Year 1 Year 2 Year 3 Year 4 Project A -1000 600 300 200 200 Project B -1000 300 500 500 500 (A) According to the payback period method of capital budgeting, which project(s) should the firm choose and why? (B) According to the NPV method of capital budgeting, which project(s) should the firm choose and why? Edit View Insert Format Tools Table 12pt v Paragraph B I U Av Av T?v

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