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Clean 15': Clear Berhad is considering to invest in a developmental research project. The investment opportunities Project A and Project B, are mutually exclusive and

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Clean 15': Clear Berhad is considering to invest in a developmental research project. The investment opportunities Project A and Project B, are mutually exclusive and have the following estimated cash flows Year Project A Project B I] $125,000 $125,000 1 $62,500 $22,500 2 $62,500 $22,500 3 $25,000 $75,000 4 $25,000 $75,000 (a) Compute the net present value of both projects given a 10%) cost of capital for the rm. (b) Compute the internal rates of returns for both the projects. (c) If the firm is able to reinvest the cash flows from the projects and earn a 10% annual rate of return, which project has the highest expected rate of return? (d) 'Which project should the firm adopt? Why

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