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ABC firm is choosing between two mutually exclusive projects. Year Project 1 Project 2 0 (10,000) (12,000) 1 4000 5000 2 5000 4000 3 6000

ABC firm is choosing between two mutually exclusive projects.

Year Project 1 Project 2

0 (10,000) (12,000)

1 4000 5000

2 5000 4000

3 6000 7000

ABC firm's cost of capital is 10%.

Use NPV, MIRR and discounted payback in order to provide a decision on which project ABC firm should select. Explain why.

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