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A SHARQIYAN UNIVERSITY Problem N1: (10 Marks) Your division is considering two projects. The discount rate is 10 percent, and the projects' after- tax cash
A SHARQIYAN UNIVERSITY Problem N1: (10 Marks) Your division is considering two projects. The discount rate is 10 percent, and the projects' after- tax cash flows would be: Years 0 1 2 3 Project A -$30 $5 $10 $15 $20 Project B -$30 $20 $10 $8 $6 a. Calculate the projects' NPVs and IRRs. b. If the two projects are independent, which project(s) should be chosen? c. If the two projects are mutually exclusive, which project should be chosen? d. Calculate the projects' regular paybacks and discounted paybacks. Which project looks better when judged by the paybacks? e. What two pieces of information does the payback convey that are absent from the other capital budgeting decision methods (NPV and IRR)? Dalam N02. (09 Question N3: (07 Marks) a. Compare capital budgeting decision criteria, Net Present Value (NPV) and Internal Rate of Return (IRR). b. Is it possible for conflicts to exist between the NPV and the IRR when mutually exclusive projects are being evaluated? Explain
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