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Assume that you are the CFO at Memorial Hospital. The CEO has asked you to analyze two proposed capital investments - project Alpha and project
Assume that you are the CFO at Memorial Hospital. The CEO has asked you to analyze two proposed capital investments - project Alpha and project Beta. Each project requires a net investment outlay of $155,000, and the cost of capital for each project is 9.5 percent. The projects' expected net cash flows are as follows: Year 0 1 2 Project A $ (155,000) $ 97,500 $ 45,000 $ 45,000 $ 15,000 S 12,000 Project B $ (155,000) $ 40,000 $ 40,000 $ 40,000 $ 40,000 S 40,000 3 4 5 a. Calculate each project's payback period, net present value (NPV), and the internal rate of return (IRR). b. Which project is financially acceptable? Explain your
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