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Consider the following cash flows of two mutually exclusive projects A and B Cost of Capital is 10% and the benchmark for PB is 3
Consider the following cash flows of two mutually exclusive projects A and B
Cost of Capital is 10% and the benchmark for PB is 3 years
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YEAR | Cash Flow (A) | Cash Flow (B) |
0 | -$54,000 | -$23,000 |
1 | 12,700 | 11,600 |
2 | 23,200 | 11,200 |
3 | 27,600 | 12,500 |
4 | 46,500 | 6,000 |
a. Find NPV, IRR, Profitability Index, and Payback of Project A
b. Find NPV, IRR, Profitability Index, and Payback of Project B
c. Find Crossover rate between projects A and B
d. Give your complete decision to accept and reject. Explain the reasons in detail for your decision.
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