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CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS A firm with a WACC of 10% is considering the following mutually exclusive projects: 012345 Project 1 Project 2

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CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS A firm with a WACC of 10% is considering the following mutually exclusive projects: 012345 Project 1 Project 2 -$300 - $600 $40 $250 $40 $250 $40 $80 $205 $80 $205 $80 Which project would you recommend? Select the correct answer. a. Both Projects 1 and 2, since both projects have IRR's > 0. b. Project 1, since the NPV1 > NPV2. c. Neither Project 1 nor 2, since each project's NPV 0. e. Project 2, since the NPV2 > NPV1

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