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As the CFO of TB Bank & Trust Inc. you must make a decision with respect to two investment projects, each of which requires an
As the CFO of TB Bank & Trust Inc. you must make a decision with respect to two investment projects,
each of which requires an upfront expenditure of $ million. You estimate that the rate of return is
percent and that the investment will produce the following aftertax cash flows in millions of dollars:
Table :
i What is the regular payback period for each of the projects?
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ii If the two projects are independent and the required return is percent, which projects should
the firm undertake? Justify your answer.
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iii. If the two projects are mutually exclusive and the required return is percent, which project
should the firm undertake? Justify your answer.
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