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ABC Company is considering two investments both of which cost $10,000. The cash flows are as follows: Year Project A Project B 1 $6,000 $5,000

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ABC Company is considering two investments both of which cost $10,000. The cash flows are as follows: Year Project A Project B 1 $6,000 $5,000 24,000 3,000 33,000 8,000 Based on the payback method, which of the two projects should be chosen? Select one: a. Project A which has a payback period of 2.0 years. b. Project A which has a payback period of 2.25 years. c. Project B which has a payback period of 2.0 years. d. Project B which has a payback period of 2.25 years, Why are projects with negative net present values (NPVs) unacceptable to a firm? Select one: a. Returns with negative NPVs cause an equal profit ratio. b. Returns lower than the cost of capital result in higher profit ratios c. Returns lower than the cost of capital result in firm failure. d. Returns with negative NPVs are acceptable to a firm

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