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Garage Inc. has identified two mutually exclusive projects: Year Cash Flow Project A Cash Flow Project B 0 -$29,000 -$29,000 1 14,400 4,300 2 12,300
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Garage Inc. has identified two mutually exclusive projects:
Year Cash Flow Project A Cash Flow Project B
0 -$29,000 -$29,000
1 14,400 4,300
2 12,300 9,800
3 9,200 15,200
4 5,100 16,800
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What is the IRR for each of these projects? Using the IRR decision rule, which should we accept? Is this necessarily the correct decision?
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If the required return is 11%, what is the NPV of each project? Which project should it choose using this rul
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Over what range of discount rates would we choose Project A? Project B? At which rate would we be indifferent? Explain.
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