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CAPITAL BUDGETING EXERCISE Ahmad Inc. is considering two mutually exclusive projects, process of choosing the better of two equal-risk, mutually exclusive capital expenditure projects
CAPITAL BUDGETING EXERCISE Ahmad Inc. is considering two mutually exclusive projects, process of choosing the better of two equal-risk, mutually exclusive capital expenditure projects - M and N. the cost of capital id 9%. The cash inflows associated with the two projects are as follows: Initial $28,500 Project M Project N $27,000 investment Year (t) Cash inflow Cash inflow 1 $10,000 $11,000 2 10,000 10,000 3 10,000 9,000 4 10,000 8,000 15.086 16743 a) Calculate the payback period for each project. b) Calculate the NPV for each project. c) Derive the IRR of each project. d) Rank the projects by each of the techniques used. Make and justify a recommendation.
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