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A2Z Corporation is experiencing hard capital rationing and will not be able to invest more than $1,000,000 this year. The firm is considering four mutually

A2Z Corporation is experiencing hard capital rationing and will not be able to invest more than $1,000,000 this year. The firm is considering four mutually exclusive projects with the cash flows presented below. If the firms cost of capital is 10% per year, answer the following questions:

Period

CFs of Project A, $

CFs of Project B, $

CFs of Project C, $

CFs of Project D, $

0

-750,000

-1,000,000

-1,000,000

-250,000

1

350,000

400,000

500,000

120,000

2

350,000

500,000

500,000

100,000

3

350,000

600,000

500,000

150,000

Find each projects net present value and explain what the results suggest

Find each projects profitability index and explain what the results suggest

Find each projects internal rate of return and explain what the results suggest

Given the above findings, which project(s) should the firm accept and why?

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