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A) Synergy Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given
A) Synergy Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given in the following table. The firm typically uses a discount rate of 15 percent. [ 25 marks ] Year Cash Flow (A) Cash Flow (B) - $317,000 1 2 3 4 $27,700 $56,ooo $55,ooo $399,ooo - $26,500 $9,057 $10,536 $11,849 $13,814 1. 2. Calculate the NPV of both the projects. Calculate the IRR 3. Calculate the Profitability index 4. Should both projects be accepted? Or either? Or neither? Explain your reasoning
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