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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 up-front expenditure of $25 million. You estimate that the rate of return is 9
percent and that the investment will produce the following after-tax cash flows (in millions of dollars):
Table 2:
i. What is the regular payback period for each of the projects?
(2 marks)
ii. If the two projects are independent and the required return is 9 percent, which project(s) should
the firm undertake? Justify your answer.
(3 marks)
iii. If the two projects are mutually exclusive and the required return is 11 percent, which project
should the firm undertake? Justify your answer.
(3 marks)
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